Skip to content

Research / Sulco Study No. 1 / Sources

Sources

Every source behind the full study, listed slide by slide as in the footnotes. Links open the original document. Figures were taken as of the dates shown in the study (data to 29 October 2026).

Slide 2 Base case Standalone: $11.6bn of index-linked selling, IHSG near 3,830

Slide 3 MSCI is a private index company, but its classifications steer where global equity money goes

Slide 4 Six channels link MSCI status to investment in Indonesia

Slide 5 Each tier comes with its own pool of investors; Standalone comes with almost none

Slide 6 A market is classified on three tests: income, size and access

MSCI Market Classification Framework, June 2026

Slide 7 Indonesia passes the size test; the problem is information and price formation

MSCI, Consultation on Indonesia reclassification, Oct 2026

Slide 8 Why Standalone and not Frontier: feedback to MSCI says the problems are too deep for a one-tier move

Slide 9 Money reaches a country in three steps; MSCI controls the last two

Slide 10 A country’s weight follows its tradable market value, not the size of its economy

Slide 11 Index funds must sell on the effective date; active funds have a choice but often reduce too

Slide 12 In EM, Indonesia is a small share of a large pool; in Frontier it would be a large share of a small pool

Slide 13 Four MSCI steps in nine months; the IHSG fell from 8,647 to about 5,200

Slide 14 Regulators have responded, but MSCI will judge enforcement, not announcements

Slide 15 Indonesia’s footprint in MSCI EM has already shrunk by about two thirds this year

Slide 16 About $15bn to $19bn of foreign money sits in Indonesia because of index membership

Slide 17 Four outcomes for June 2027; 50% on Standalone

Slide 18 Standalone: about $11.6bn of index-linked selling; Frontier: $8.2bn

Slide 19 Published estimates differ mainly in what they count; ours sits between passive-only and UBS’s total

Slide 20 Other foreign money could add ~$6bn of selling under Standalone

Slide 21 Identified domestic buyers cover 42-53% of the ~$19.6bn of supply to Nov 2027

Slide 22 The four big banks take about 74% of selling in the nine MSCI Standard stocks; BBCA alone about $3.4bn

Slide 23 Scenario-weighted IHSG of about 4,710, 9% below today’s ~5,200; not a price target

Slide 24 Consistency check, not an independent estimate: flows can explain about half the Standalone drop

Slide 25 Past cases were small and their price paths mixed; Indonesia’s passive outflow is ~7-9x Argentina’s

Slide 26 A weaker rupiah deepens foreign investors’ dollar losses, which can trigger more selling

Slide 27 Standalone with the rupiah at 20,000: IHSG near 3,760, a 34% dollar loss

Slide 28 Reserves can absorb the base case, at a cost similar to 2013 and 2018

Slide 29 Standalone gross foreign selling of ~$17bn equals about 12% of FX reserves; the larger risk is spillover to the rupiah and bonds

Slide 30 Only enforcement and data reforms address MSCI’s concerns; price support only cushions

Slide 31 The Standalone P/E sets the level; the rupiah is second; flows enter mainly through the slide 24 check

Slide 32 The outcome depends on whether reforms reach the whole market by mid-2027

Model, scenario probabilities and estimates: Sulco Advisory. See the methodology note.