Jakarta. Indonesia’s benchmark stock index edged lower on Friday morning as investors digested Bank Indonesia’s latest interest rate hike and MSCI’s decision to retain the country’s emerging market status while flagging persistent concerns over market transparency.

Jakarta Composite Index (JCI) fell 11 points, or 0.17%, to 6,161 in volatile early trading.

As of 9:10 a.m. Jakarta time, trading volume reached 3.7 billion shares with a turnover of Rp 2.3 trillion ($128.8 million) across more than 235,000 transactions. Gainers outnumbered losers, with 285 stocks advancing, 195 declining, and 200 unchanged.

Phintraco Sekuritas said Bank Indonesia’s Board of Governors Meeting had raised the benchmark BI Rate by 25 basis points to 5.75%, in line with market expectations, to support rupiah stability and contain inflationary pressures.

“The latest increase brings Bank Indonesia’s cumulative rate hikes to 100 basis points and puts the BI Rate at its highest level since April 2025,” Phintraco Sekuritas said.

Bank Indonesia maintained its 2026 inflation target at 1.5%-3.5% and projected economic growth of 4.9%-5.7%.

Meanwhile, annual credit growth accelerated to 11.51% in May from 9.98% in April.

“This marks the fastest annual credit growth since July 2024, driven primarily by investment loans, which grew 21.95%, working capital loans at 8.09%, and consumer lending at 5.89%. Bank Indonesia continues to project credit growth of 8%-12% in 2026,” Phintraco Sekuritas said.

Separately, MSCI’s latest Market Accessibility Review provided a detailed assessment of the accessibility of equity markets included in its indexes, evaluating five key criteria: openness to foreign ownership, ease of capital inflows and outflows, operational efficiency, availability of investment instruments, and institutional stability.

MSCI uses 18 measures to assess those criteria. According to Phintraco Sekuritas, Indonesia still requires improvements in foreign exchange market liberalization and information flow.

Liza Suryanata, head of research at Kiwoom Sekuritas, said the downgrade in information flow was the most significant change in this year’s MSCI review.

According to Liza, MSCI’s assessment goes beyond disclosure practices and raises questions about the quality of price discovery in Indonesia’s capital market.

MSCI highlighted several issues of concern for global investors, including limited transparency in share ownership structures, the lack of English-language disclosures by some listed companies, concerns over the quality and investability of free float shares, and indications of coordinated trading behavior that could disrupt healthy price formation.

“The final point warrants serious attention because MSCI is generally very conservative in its wording. When it refers to coordinated trading behavior affecting price discovery, it signals growing concern over market transparency, free float quality, and the integrity of Indonesia’s capital market,” Liza said.

She said the review helps explain why foreign investors remain cautious toward Indonesian equities despite relatively attractive valuations compared with other emerging markets.

“MSCI classification is determined by three main pillars: economic development, market size and liquidity, and market accessibility. Indonesia continues to perform strongly in terms of market size and liquidity. Its market capitalization and daily trading value are significantly larger than those of most frontier markets,” she said.

Liza added that MSCI’s latest findings do not introduce new concerns but reinforce issues that have been weighing on global institutional investors in recent months.

“This report serves as a reminder that the biggest challenge facing Indonesia’s capital market is no longer market size or accessibility, but improving governance, transparency, and market integrity. Until these issues are addressed, foreign investors are likely to maintain an underweight position in Indonesian equities,” she said.

Overnight, US stocks rebounded sharply, recouping most of the previous session’s losses as gains in major technology companies lifted sentiment. The S&P 500 advanced 1.1%, the Dow Jones Industrial Average rose 0.1%, and the Nasdaq Composite jumped 1.9%.

In Asia, Japan’s Nikkei 225 gained 0.33%, while South Korea’s Kospi surged 2.56% as of 9:17 a.m. Jakarta time. Markets in Hong Kong and mainland China were closed for the Dragon Boat Festival holiday.

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