Indexing Integrity: The Double Standard of Capital Gatekeeping
When FTSE Russell announced the postponement of its review of Indonesian stocks for potential upgrade to 'emerging market' status, citing 'continued issues relating to market accessibility and settlement efficiency' (Financial Times, 2024), the framing positioned this as a standard procedural delay. The implication is that Indonesia simply hasn't met objective, universal benchmarks. However, this
narrative overlooks a documented history of inconsistent application of these very standards. CASE A: Indonesia's 'Accessibility Issues' The reported concerns for Indonesia largely revolve around foreign investor access and the efficiency of its clearing and settlement systems. The Indonesian Financial Services Authority (OJK) had notably begun implementing measures to streamline foreign investor
access and reduce processing times as early as 2021 (Jakarta Post, 2021). The deferral implies these efforts are insufficient, pushing back a potential reclassification that could attract billions in foreign investment. CASE B: Saudi Arabia's Accelerated Inclusion Contrast this with the rapid ascent of Saudi Arabia into major emerging market indices. In 2018, both MSCI and FTSE Russell
fast-tracked Saudi Arabia's inclusion, citing significant reforms. While the Kingdom did implement changes (e.g., direct foreign investor access), these moves occurred against a backdrop of deeply entrenched governance issues and human rights concerns that typically raise questions about market stability and investor confidence. For instance, the killing of Jamal Khashoggi in October 2018, just