June 24 (Reuters) - Index provider MSCI has extended a review into transparency in Indonesia's equity market, staving off — for now — a downgrade to frontier market status but offering little longer-run relief for this year's worst-performing major stock market.

The Jakarta Composite index .JKSE was flat in early trade in response, with loses of about 30% year-to-date after MSCI threatened a downgrade in January over opacity in ownership and trade flow in the market and limited free float even in larger cap stocks.

The market's MSCI classification is important because it dictates billions of dollars in passive investment allocation. Here are investor and analyst responses to the MSCI review:

NIRGUNAN TIRUCHELVAM, HEAD OF CONSUMER AND INTERNET AT ALETHEIA CAPITAL, SINGAPORE:

"The tone of the MSCI statement suggests that the chances of a downgrade to frontier classification remain relatively high."

"We were counting on a 50/50 chance of a downgrade that continues to be our core expectation, but there needs to be a concerted effort by the Indonesian authorities to address some of the transparency and concentration risks that the MSCI has flagged in this statement and in previous statements."

GARY TAN, PORTFOLIO MANAGER, ALLSPRING GLOBAL INVESTMENTS, SINGAPORE:

"The outcome was in line with market expectations, with the tone of MSCI’s statement more cautionary than outright negative in our view."

"What stood out is the clear shift toward implementation and measurable outcomes, signalling that announced reforms alone are not sufficient. The extension of the review to November keeps pressure on regulators and effectively kicks the decision down the road. In the interim, we expect investor focus to shift toward currency stability and policy credibility, with the trajectory of the rupiah a key barometer of progress as the government works to restore confidence."

TAN ALTUNDAG, INVESTMENT MANAGER, EMERGING MARKET EQUITIES, PICTET ASSET MANAGEMENT, HONG KONG:

"Retaining EM status preserves Indonesia's access to the broadest institutional investor base and removes the immediate forced-selling threat. It gives regulators the runway to deliver on the reforms pledged to MSCI — though Indonesia remains under active watch. Staying in the investable universe for a broader investor audience is meaningful, but it does not automatically restore confidence or reverse outflows."

"This is not a clear-cut recovery narrative, and the bar for re-engagement remains high. Beyond the MSCI decision itself, investors will focus on regulatory follow-through and policy credibility as the most tangible proxies for improved governance direction."