GIC and Temasek have denied claims that they pressured MSCI to downgrade Indonesia's stock market classification. Former Indonesian trade minister Muhammad Lutfi made these accusations. He said the two Singaporean investors coerced MSCI to consider a downgrade. This could trigger market panic and allow them to buy Indonesian stocks at lower prices.
Key Details
In response, Temasek's head for the Asia-Pacific, Fock Wai Hoong, called the allegations "patently untrue." He stressed that no one from Temasek has contacted MSCI to influence its decisions. A GIC spokesperson supported this view, stating that their investment choices are based on company fundamentals, not index classifications.
This controversy comes after a major sell-off in Indonesian stocks. On October 15, MSCI warned that it might remove Indonesia from its global indices unless market governance improves. The Indonesia Stock Exchange defended MSCI's independence, saying global index providers operate without outside influence.
Background
Indonesian officials are working to avoid a downgrade. MSCI is expected to make a decision by June 30, 2027. The Indonesia Stock Exchange plans to remove companies with highly concentrated ownership from its listings to improve governance standards. For more on the challenges facing Indonesian markets, see our article on Indonesian Stocks Plunge to Six-Year Low Amid MSCI Warning.
The allegations and denials could affect investor confidence in Indonesian stocks, especially with MSCI's decision approaching. Stocks in the IDX are likely to stay volatile as investors respond to governance issues and possible index changes. Keep an eye on MSCI's upcoming decision about Indonesia's market status, expected by June 30, 2027.
Based on reporting by: businesstimes.com.sg