MSCI said Indonesia no longer meets Emerging Markets eligibility and proposed
removing the country from its widely followed suite of indices, a change that
could prompt sizable portfolio outflows. Angus Mackintosh, ASEAN markets
specialist at Alethia Capital, called the move overly severe given steps
Indonesia has taken to address market transparency and free-float, saying MSCI’s
case rests on insufficient evidence those reforms are implemented and on a
failure to sanction participants in apparent price manipulation. Mackintosh
added Indonesia can only reverse the decision by imposing strict sanctions and
fines on those involved in collusive manipulation, and that grouping Indonesia
with markets such as Lebanon, Palestine and Argentina misrepresents the
operating condition of most companies listed.
