Goldman Sachs lowers Indonesia's stock market rating: concerns about investment attractiveness may trigger an outflow of over $13 billion in funds

Goldman Sachs has downgraded its rating on the Indonesian stock market to underweight and warned that if MSCI downgrades it to a frontier market, concerns about the investability of the Indonesian market could trigger over $13 billion in capital outflows. Goldman Sachs predicts that in the extreme scenario of the Indonesian stock market being downgraded from an emerging market to a frontier market, passive funds tracking MSCI indices could sell up to $7.8 billion. If FTSE Russell also reassesses its free float status and position, it could trigger an additional $5.6 billion in capital outflows. "We expect passive selling to continue and view it as an unresolved factor that will harm market performance," analysts including Timothy Moe wrote in the report. Concerns about the investability of the market could trigger capital outflows exceeding $13 billion.