Indonesia Risks Downgrade from Emerging to Frontier Market Status

MSCI's June downgrade of Indonesia's information-flow criterion suggests a reclassification from Emerging to Frontier Market status could follow. Such a move forces all emerging-market index funds to sell Indonesian holdings at once—far larger than May's six-company removal. Indonesia's economy relies on foreign portfolio inflows averaging 4.5% of GDP. Eight upcoming MSCI review dates could reset criterion scores.