QUOTES-Reaction after MSCI warns of Indonesia 'investability' risks, possible index action

SINGAPORE, Jan 28 (Reuters) - Indonesian stocks slumped 7% on Wednesday after index provider MSCI MSCI.N flagged investability risks, citing a lack of transparency in corporate ownership structure and free float data.

In a setback to a market that has struggled with persistent foreign investor outflows, MSCI said if there was no meaningful improvement in transparency by May, that could lead to a lower weighting for Indonesian stocks in its emerging-market indexes or even a downgrade to its frontier-market status.

Here are some comments from market analysts and investors:

MOHIT MIRPURI, FUND MANAGER, SGMC CAPITAL, SINGAPORE:

"Indonesia is effectively on probation until May, which keeps sentiment mildly negative in the near term, but there is no forced selling. In our view, Indonesia is clearly not a Frontier market, it’s a G20 economy and periods of uncertainty like this tend to create opportunities to accumulate strong companies."

WILLIAM SIMADIPUTRA, HEAD OF RESEARCH INDONESIA, DBS GROUP:

"We believe this could put Indonesia under negative sentiment if MSCI decides to reduce Indonesia’s weighting in the MSCI Emerging Markets (EM) index. However, we think downside risk will likely be limited due to persistent foreign outflows since 2025. We see opportunities to accumulate companies with strong fundamentals if a sell-off occurs."

JOHN STAVLIOTIS, PORTFOLIO MANAGER, ANTIPODES PARTNERS, SYDNEY:

"The issues could be more significant for conglomerates and smaller private enterprises where free float data may be more difficult to verify. Any downgrade to weights will impact allocations to Indonesia, although active positioning in the country is at a low base.

"The IDX have already stated that they are in discussion with MSCI to publish free float data and resolve a major concern of the index provider. This may take time to execute."

GARY TAN, PORTFOLIO MANAGER, ALLSPRING GLOBAL INVESTMENTS, SINGAPORE:

"The MSCI announcement may result in some near‑term selling pressure in Indonesian equities, which is why prompt and coordinated action from the Indonesia Stock Exchange and the relevant regulators will be important to help stabilise market sentiment.

"How Indonesia responds will be an important test of its broader capital‑market reform agenda and an opportunity to reaffirm its commitment to transparency, stronger corporate governance, and attracting stable long‑term foreign investment flows."

ANDREY WIJAYA, HEAD OF RESEARCH, RHB INDONESIA, JAKARTA:

"Without clearer visibility on ultimate beneficial ownership and concentration, valuation re-rating is likely to stay constrained despite improving corporate fundamentals. The May 2026 review represents a critical milestone.

A lack of tangible progress could trigger structural de-rating risks through EM weight reductions or, in a tail-risk scenario, Frontier Market reclassification. Until then, investor preference is likely to remain skewed toward large, liquid names with clear controlling shareholders, high effective free float, and limited reliance on index-driven flows."