After meeting MSCI representatives on Monday, Indonesia Stock Exchange chief executive Jeffrey Hendrik said the benchmark's calculation will exclude companies with tightly held share bases to build a "more credible and integrity-driven price index." He called it "best practice," pointing to Hong Kong's Hang Seng Index, which also excludes such names. "We hope it will be effective," he told reporters in Jakarta.
Hendrik said stocks with high shareholder concentration make up about 18% of the Jakarta Composite Index's total weight. Those shares will keep trading, but their price moves will not count toward the index. In addition, the exchange will disclose the identities of investors who own at least 1% of every listed firm and clarify if each such owner is connected to the company. Timelines for both steps will be announced soon.
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Last week, MSCI cited worries over ongoing, coordinated trading behavior and a lack of transparency in ownership across Indonesia's stock market. Authorities say these measures are part of a broader regulatory push to avoid a double downgrade to standalone-market status from emerging-market status. In plain English: the benchmark will reflect a different slice of the market once the roughly 18% with concentrated ownership is carved out, so track the implementation dates to understand how the index you follow will stack up going forward.
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