Key Takeaways
- • Indonesia is accelerating equity market reforms after MSCI threatened to downgrade the country to "standalone market" status over opaque share ownership and suspected coordinated trading, according to Investment Minister Rosan Roeslani in an interview with Reuters.
- • Authorities have made progress on free float and on disclosure of holdings above 1%, but enforcement and concentrated stocks still require more work.
- • The government plans to begin divesting state-owned entity stakes next year via IPOs or private placements, with airports, seaports and healthcare likely first.
- • Danantara, the sovereign wealth fund Rosan also heads, expects 2027 investments could exceed this year's estimated $14 billion and plans to shift its domestic-to-international split from roughly 80/20 toward 60/40.
- • Danantara may issue more debt after its $1.5 billion debut Eurobond in June, with options including Panda and Dim Sum bonds and a 30-year Eurobond.
Summary
Indonesia is stepping up reforms to its equity market in response to concerns raised by index provider MSCI, which froze some index changes over opaque share ownership and suspected coordinated trading. In October, MSCI warned it could relegate Southeast Asia's largest economy to "standalone market" status, a move that could prompt investor outflows and remove Indonesia from indexes tracked by funds. The MSCI announcement triggered the steepest one-day fall in Indonesian stocks in 28 years, according to Reuters.
In an interview with Reuters, Investment Minister Rosan Roeslani said the government had made progress on free float and on the disclosure of holdings above 1%, but more work was needed on enforcement and on concentrated stocks. He said Indonesian authorities were meeting regularly with MSCI and that the reforms, which began before the warning, have since been significantly stepped up. "We are continuing to improve our capital market, and hopefully we can accelerate this improvement," he said.
The reform push comes as Indonesia seeks more private investment in state assets. Rosan said the government plans to begin divesting stakes in state-owned entities next year through IPOs or private placements, with airports, seaports and healthcare likely to go first, as these drew the most investor interest. He said the government was open to holding-level or operational-level structures, declining to provide further detail.
Rosan, who also heads sovereign wealth fund Danantara, said the fund plans offices in New York and Hong Kong, and a Saudi office following its purchase of land and hotels in Mecca to serve Indonesian Hajj pilgrims. He said Danantara's investments next year could surpass this year's estimated $14 billion, targeting what he described as "under-pressure ... and undervalued" assets, though he did not name specific opportunities. He expects the fund's domestic-to-international allocation, currently about 80% to 20%, could eventually move to 60% to 40%.
Danantara could also issue additional debt following its debut $1.5 billion Eurobond in June, subject to market conditions and yields. Rosan said options include Panda and Dim Sum bonds and a 30-year Eurobond, noting investor appetite for longer-dated paper.
In an interview with Reuters, Investment Minister Rosan Roeslani said the government had made progress on free float and on the disclosure of holdings above 1%, but more work was needed on enforcement and on concentrated stocks. He said Indonesian authorities were meeting regularly with MSCI and that the reforms, which began before the warning, have since been significantly stepped up. "We are continuing to improve our capital market, and hopefully we can accelerate this improvement," he said.
The reform push comes as Indonesia seeks more private investment in state assets. Rosan said the government plans to begin divesting stakes in state-owned entities next year through IPOs or private placements, with airports, seaports and healthcare likely to go first, as these drew the most investor interest. He said the government was open to holding-level or operational-level structures, declining to provide further detail.
Rosan, who also heads sovereign wealth fund Danantara, said the fund plans offices in New York and Hong Kong, and a Saudi office following its purchase of land and hotels in Mecca to serve Indonesian Hajj pilgrims. He said Danantara's investments next year could surpass this year's estimated $14 billion, targeting what he described as "under-pressure ... and undervalued" assets, though he did not name specific opportunities. He expects the fund's domestic-to-international allocation, currently about 80% to 20%, could eventually move to 60% to 40%.
Danantara could also issue additional debt following its debut $1.5 billion Eurobond in June, subject to market conditions and yields. Rosan said options include Panda and Dim Sum bonds and a 30-year Eurobond, noting investor appetite for longer-dated paper.
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