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By Sameer Manekar and Shivangi Lahiri

June 19 (Reuters) - Indonesia's rupiah weakened and stocks traded unevenly on Friday after index provider MSCI raised fresh concerns about the country's investability, while South Korean shares erased early gains after hitting a record high.

The MSCI EM Asia gauge .MIMS00000PUS shed early gains to fall nearly 1% in afternoon trading, retreating from a record peak as South Korea's KOSPI index .KS11 reversed course to drop as much as 2%.

The reversal follows a 17% surge in the KOSPI over the past six sessions, fuelled by a rush into chipmakers. Market holidays in the U.S. and Taiwan and signs of an early snag in U.S.-Iran ceasefire talks lifted oil prices and dampened risk appetite.

Israeli strikes in southern Lebanon and U.S. Vice President JD Vance's cancellation of talks with Iranian negotiators raised fresh concerns about peace prospects, prompting investors to pare equity exposure.

UNDER THE MSCI MICROSCOPE

Indonesia's benchmark Jakarta Composite Index .JKSE drifted in a tight range around its prior close, last down 0.7%, while the rupiah dipped as much as 17,850 per dollar before recouping to around 17,820 by noon.

A warning from MSCI on limited visibility in shareholdings and coordinated trading behaviour, along with a downgrade of Indonesia's information flow criterion to negative, has dealt a fresh blow to already battered capital markets.

Foreign investors have pulled around $3.65 billion in 2026 from Indonesian equities. A follow-up major test will be a market classification review next week, where a downgrade to frontier status could trigger another bout of outflows.

Nevertheless, market participants broadly expect Southeast Asia's top economy to retain its emerging markets status.

"The probability (of a downgrade) is low because stocks within MSCI Indonesia that had free float issues have already been exposed and the said stocks have been excluded already," said Jayden Vantarakis, head of ASEAN equity research at Macquarie Capital.

Josua Pardede, chief economist at PermataBank, said a downgrade next week was not certain. "The weak points remain concentrated in information flow and foreign exchange market liberalization, rather than a broad collapse across the whole accessibility framework".

Separately, MSCI also flagged persistent concerns over investability in Turkey and lowered its information flow criterion to "negative", citing limited transparency in shareholding structures.

STOCKS SLIP FROM RECORDS

South Korea's benchmark KOSPI index .KS11 fell as much as 2.1% after advancing 3.6% to record highs earlier in the day. Singapore stocks .STI edged 0.6% lower, retreating from an all-time high in the previous session.

Equities in the Philippines .PSI also pared early gains to trade largely flat, while the peso PHP= fell to 60.762 per dollar. The country's central bank raised key rates for a second consecutive meeting on Thursday.

Malaysian stocks .KLSE recouped some early losses to trade down 0.5%. Data showed exports rose by 45.3% in May from a year earlier, driven by sustained demand for electrical and electronic products.

Shares in Thailand .SETI slipped around 1%, while the baht THB=TH fell to a one-week low of 32.93 a dollar.

Financial markets in Taiwan .TWII, TWD=TP were closed for a holiday.

HIGHLIGHTS:

** Indonesian financial regulator names Jeffrey Hendrik as stock exchange chief

** Indonesia to halt free meals during school break, scale back programme scope

** Taiwan central bank raises growth outlook, flags inflation concerns

** BOJ flags risk of inflation overshoot, signals rate-hike intent

Asia stock indexes and currencies at 0419 GMT
COUNTRY	FX RIC	FX DAILY %	FX YTD %	INDEX	STOCKS DAILY %	STOCKS YTD %
Japan	JPY=	-0.01	-2.94	.N225	-0.22	36.77
China	CNY=CFXS	-	+3.18	.SSEC	-	3.06
India	INR=IN	+0.06	-4.68	.NSEI	-0.90	-8.34
Indonesia	IDR=	-0.67	-6.45	.JKSE	-0.71	-29.12
Malaysia	MYR=	-0.48	-1.91	.KLSE	-0.47	1.39
Philippines	PHP=	-0.34	-3.22	.PSI	0.08	1.75
S.Korea	KRW=KFTC	+0.14	-6.40	.KS11	-0.12	114.83
Singapore	SGD=	-0.19	-0.51	.STI	-0.61	11.52
Taiwan	TWD=TP	-	-0.47	.TWII	-	60.43
Thailand	THB=	-0.46	-4.38	.SETI	-0.64	25.03