Singapore’s sovereign wealth fund GIC and state investment company Temasek have denied allegations that they pressured global index provider MSCI to downgrade Indonesia’s stock market, following accusations by a former Indonesian trade minister.
The denials came after former Indonesian trade minister Muhammad Lutfi claimed on Oct 20 that the two Singaporean investors sought to trigger market panic and drive down Indonesian share prices, allowing them to acquire local equities at discounted prices, Singapore-based media The Straits Times reported on Wednesday.
A GIC spokesperson told The Straits Times, “Our investment decisions are not driven by index classifications or top-down views of a market and instead by company and asset-level fundamentals…
“We have been invested in Indonesia for over 30 years across asset classes and will continue to invest where we find good, bottom-up, risk-adjusted opportunities.”
Fock Wai Hoong, Temasek Global Investment’s head for the Asia-Pacific excluding China and India, said that the allegations have “no basis and are patently untrue”.
“No one from Temasek – neither the institution nor the individuals working for the institution – has ever reached out to MSCI in order to influence any decisions they have ever made around any exchange across the region. Maybe I’ll leave it at that,” he said, according to The Straits Times.
The controversy follows MSCI’s Oct 15 announcement that it was reviewing whether to reclassify Indonesia from an emerging market to a standalone market, citing concerns over shareholding transparency, suspicious trading activity and regulatory enforcement.
The prospect of a downgrade triggered a sharp sell-off in Indonesian equities after the announcement.
A reclassification could weaken foreign investment flows, as Indonesian stocks would be excluded from MSCI’s emerging-market indexes, which are widely used as benchmarks by global investors.
MSCI said in an earlier statement that it will announce its final decision by the end of June 2027 and may provide an interim update on market participant feedback during the consultation period.
“As part of the June 2026 Market Classification Review, MSCI reported that market participants had raised significant concerns regarding the investability of the Indonesian equity market, including persistent opacity in shareholding structures and suspected coordinated trading behavior,” MSCI said.
While the Indonesian authorities have announced reforms, including enhanced disclosure of shareholders with ownership above 1 percent, more granular investor classification disclosure, High Shareholding Concentration (HSC) reporting, and a roadmap towards a minimum free float requirement of 15 percent, institutional investors have emphasized the need for consistent implementation and evidence of sustained material impact from these announcements.
MSCI indicated in June that if sufficient progress was not evident by the November 2026 Index Review, MSCI would consider launching a consultation on reclassifying the Indonesian market.
Meanwhile, the Indonesia Stock Exchange has pledged reforms to improve market transparency and address concerns over concentrated share ownership.
Featured photo credits: Indonesia Stock Exchange