MSCI Index Changes and Market Reforms in Indonesia

May 13, 2026, 07:46
AsiaFinance

Introduction

MSCI has announced the removal of six companies from its Indonesia Index, which caused a drop in the Jakarta Composite Index and affected several large business groups.

Main Body

This rebalancing is part of a larger review that MSCI started in January. During this process, the provider found problems with transparency and the fact that a few owners control too many shares. These issues meant that Indonesia risked being downgraded from an 'emerging' market to a 'frontier' market. Consequently, the Indonesian Financial Services Authority (OJK) began implementing reforms to improve market credibility. These changes include requiring more detailed information about ownership and increasing the number of shares available for public trading. There are different views on these changes. On one hand, the Jakarta Composite Index hit a one-year low, falling by about 1.9%, and shares in companies like Amman Mineral International dropped by roughly 10%. However, many analysts emphasize that this is a necessary correction. They argue that removing companies with limited public shares and concentrated control is a positive step toward better governance. Furthermore, the removal of 13 firms from the small-cap index shows a wider effort to improve the quality of the index. The financial impact is quite large, as Goldman Sachs estimates that $1.6 billion will leave the market due to these changes. This adds to a total of $2.2 billion in foreign investment withdrawals this year. Despite these losses, experts believe Indonesia will likely avoid a downgrade to frontier market status, provided that the government continues to align its regulations with global standards.

Conclusion

The Indonesian market is currently experiencing volatility as funds adjust to the May 29 changes, while the government continues to work on increasing market transparency.

Learning

⚡ The Power of 'Connector Logic'

To move from A2 to B2, you must stop using simple sentences like "The index dropped. The government is working." and start building logical bridges. This article is a goldmine for 'Cause and Effect' and 'Contrast' structures.

🛠 The "B2 Bridge" Toolset

1. The Result Bridge: Consequently Instead of saying "So," use Consequently. It signals a professional, academic result.

  • A2: Problems were found, so OJK started reforms.
  • B2: Problems were found; consequently, OJK began implementing reforms.

2. The Balance Bridge: On one hand... However... B2 speakers don't just give one opinion; they weigh two sides.

  • Side A: On one hand, the index hit a low (Negative).
  • Side B: However, analysts say it is a necessary correction (Positive).

3. The Addition Bridge: Furthermore When you have more than one piece of evidence, don't just say "And." Use Furthermore to pile on your argument.

  • Example: The index dropped. Furthermore, 13 firms were removed from the small-cap index.

🔍 Vocabulary Upgrade: From 'Basic' to 'Precise'

Stop using generic words. Swap them for these professional alternatives found in the text:

A2 Word (Simple)B2 Word (Precise)Context in Article
ChangeVolatilityMarket volatility (unstable prices)
Fixed/MadeAlignedAlign regulations with standards
Bad thingDowngradeDowngrade to frontier status
ImportantNecessaryA necessary correction

Pro Tip: Notice the phrase "provided that" in the final paragraph. This is a high-level way of saying "only if." Using this in a speaking exam immediately signals B2 proficiency.

Vocabulary Learning

rebalancing (n.)
The process of adjusting a portfolio to maintain a desired mix of assets.
Example:The rebalancing of the fund helped reduce risk.
transparency (n.)
Openness and clarity in operations or decision‑making.
Example:The company's transparency increased after the audit.
ownership (n.)
The state of having legal rights to something.
Example:Ownership of the shares was transferred to the new investor.
concentrated (adj.)
Gathered in a small area or held by a few people.
Example:Concentrated control can lead to unfair advantages.
downgraded (v.)
Lowered in status, rank, or quality.
Example:The company was downgraded by the rating agency.
credibility (n.)
The quality of being trustworthy or reliable.
Example:The bank's credibility was restored after the reforms.
implementing (v.)
Putting a plan or rule into effect.
Example:Implementing new rules requires careful planning.
reforms (n.)
Changes designed to improve a system or organization.
Example:Reforms in education are underway.
correction (n.)
An adjustment made to fix an error or mistake.
Example:The correction of the data was necessary.
governance (n.)
The way an organization is managed and controlled.
Example:Good governance ensures accountability.
withdrawals (n.)
The act of removing money or assets.
Example:Withdrawals from the account increased during the crisis.
volatility (n.)
The tendency of something to change rapidly and unpredictably.
Example:Market volatility surprised investors.
adjust (v.)
To change something so it fits better or works more effectively.
Example:We need to adjust the budget.
align (v.)
To bring into agreement or harmony with something else.
Example:The policy aligns with international standards.
regulations (n.)
Rules or directives made by an authority to control conduct.
Example:New regulations will affect small businesses.
risk (n.)
The possibility of loss or harm.
Example:The risk of default is high.
emerging (adj.)
Developing or becoming more prominent, especially in markets.
Example:Emerging markets offer growth opportunities.
frontier (adj.)
On the edge or boundary of development, often used for markets.
Example:Frontier markets are less developed.
small-cap (adj.)
Having a small market capitalization, often more volatile.
Example:Small‑cap stocks can be more volatile.
investment (n.)
Money put into something with the expectation of profit or growth.
Example:Investment in renewable energy is growing.
necessary (adj.)
Required or essential.
Example:A necessary step for progress.
emphasize (v.)
To give special importance or attention to something.
Example:The report emphasizes the need for reform.
impact (n.)
The effect or influence of one thing on another.
Example:The impact of the policy was felt worldwide.
estimate (v.)
To approximate or guess the value or amount of something.
Example:They estimate the cost at $1 million.
avoid (v.)
To prevent or keep away from something undesirable.
Example:We should avoid unnecessary risks.
increasing (adj.)
Becoming larger or more numerous.
Example:Increasing demand drives prices up.