S&P Dow Jones Indices has placed Indonesia on its watchlist for a potential downgrade from emerging to frontier market status, citing persistent issues with market transparency.
The move aligns with earlier caution from rival index provider MSCI, compounding pressure on Jakarta to reform its capital markets.
A reclassification would trigger automatic divestment by passive funds tracking emerging-market benchmarks, potentially draining billions of dollars from Indonesian equities.
The decision underscores growing scrutiny of governance and disclosure standards in Southeast Asia's largest economy.
Indonesia has intensified efforts to overhaul its capital market framework in response to these threats.
Regulators are working to address structural weaknesses that have drawn criticism from global index providers.