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View all search resultsIDX overhauls index to limit fallout from MSCI warning
In response to the moves, the IDX Composite climbed more than 5 percent on Tuesday, rebounding from a nearly 15 percent drop over Friday and Monday.
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An electronic board displays stock prices on Jan. 29 at the Indonesia Stock Exchange (IDX) in Jakarta. (AFP/Yasuyoshi Chiba)
T
he Indonesia Stock Exchange (IDX) introduced new initiatives, including a plan to exclude stocks with high shareholder concentration (HSC) from its benchmark index, in an effort to address transparency concerns raised by global index provider MSCI.
IDX president director Jeffrey Hendrik unveiled the move following a meeting with MSCI on Monday, saying that it was aimed at creating “a more credible price index with higher integrity”.
The exchange currently has 80 stocks listed under the HSC category. These stocks account for roughly 18 percent of the IDX Composite index total weighting.
“All of these stocks with high shareholding concentration will be excluded from the IDX Composite index calculation. They remain tradable, but their price movement will no longer affect the index,” Jeffrey explained.
He added that such a measure would provide a “fairer reflection” of the benchmark index’s movement, given the “potential risks” carried by shares with concentrated ownership.
Jeffrey called it a “best practice”, citing that Hong Kong’s stock exchange also also implemented a similar measure for the Hang Seng index.
Additionally, he announced that the bourse’s plan to publish the names of investors holding at least a 1 percent stake in a company’s shares would include descriptions of their affiliation with the company.
