“We don’t think Indonesia will be downgraded to frontier market and it will stay in the emerging-market category,” said Henry Wibowo, a former JPMorgan & Chase Co strategist who co-founded Alphagate Capital in Jakarta. “That being said, we are expecting down weight for Indonesia within the MSCI EM bucket, as we expect some names to be excluded in the May rebalancing, especially those mentioned in the concentration list.”
(April 7): Indonesian market reforms to meet MSCI Inc’s demands may stave off a downgrade though they don’t go far enough to prevent a lower weighting in global indices, some analysts said.
The measures, which include calling out some of the nation’s biggest companies for overly-concentrated ownership, will probably lead to some stocks getting culled by the index compiler in May due to insufficient shares for public trading, according to Citigroup Inc and Alphagate Capital. MSCI in January had warned Indonesia could be cut to frontier-market status if it doesn’t address shareholding structure and possible collusion in trading.
