TEMPO.CO, Jakarta - Equity analyst of Indo Premier Sekuritas (IPOT), David Kurniawan, estimated that Rp30 trillion to Rp31 trillion in foreign investment could be pulled from the domestic capital market ahead of the Morgan Stanley Capital International (MSCI) index rebalancing at the end of May 2026. The adjustment of Indonesian equities within the MSCI index is slated to take effect following the market close on May 29, or by June 1, 2026.
David explained that the MSCI rebalancing, which involves the exclusion of 18 Indonesian stocks, has prompted the market to brace for a shift in foreign capital flows.
"This could create short-term selling pressure on the IHSG (Jakarta Composite Index) leading up to the effective date of the index changes, particularly regarding the stocks being removed," he told Tempo on Wednesday, May 13, 2026.
However, David maintained that this sentiment does not stem from a shift in economic fundamentals, but rather reflects the market's reaction to anticipated outflows and passive portfolio realignments. He further noted that the expected capital flight will likely heighten demand for foreign currency assets, subsequently exerting pressure on the exchange rate.
Meanwhile, the Financial Services Authority (OJK) views the MSCI rebalancing as a consequence of ongoing efforts to reform the national capital market. Hasan Fawzi, OJK Executive Head of Capital Market Supervision, Derivatives, and Carbon Exchange, stated that his institution has already factored in the short-term volatility these adjustments may cause for stock prices.
Hasan expressed hope that the MSCI adjustment will ultimately establish a new baseline for elevating the quality of Indonesian equities in the future. "We hope our starting point will increasingly present the quality of listed stocks on the exchange and, of course, that these stocks will be encouraged to become investment choices for investors," he remarked during a press conference at the Indonesia Stock Exchange in Jakarta on Wednesday, May 13, 2026.
Read: OJK: MSCI Rebalancing Is a Consequence of Market Reform
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