Indonesia Stock Exchange revamps IDX Composite to curb high-shareholder concentration risks

In response to MSCI’s transparency concerns, the Indonesia Stock Exchange introduced a reform that will strip stocks with high shareholder concentration from the IDX Composite index. Eighty firms, accounting for roughly 18% of the index’s total weighting, will no longer influence the benchmark, though they remain tradable on the market. IDX president director Jeffrey Hendrik said the change is meant to create a more credible and integrity-driven price index.

He pointed to Hong Kong’s stock exchange, which applied a comparable measure to the Hang Seng index, as a best-practice example. The IDX also announced a new disclosure regime that will publish the names and affiliations of investors owning at least one percent of a company’s shares. The IDX Composite rose more than 5% on Tuesday after the announcement, recovering from a near 15% decline earlier in the week.