Overview
- MSCI, which announced the cuts Tuesday, removed six large-cap firms from its Indonesia index and 13 small caps, and the news sent Jakarta’s benchmark to a one-year low on Wednesday.
- The large-cap deletions target companies with tightly held shares, including Amman Mineral, Chandra Asri, Dian Swastatika, Barito Renewables, Petrindo Jaya Kreasi, and Sumber Alfaria, which was shifted to the small-cap index.
- MSCI cited extreme ownership concentration and thin free floats that distort prices, with Barito Renewables at roughly 2.69 percent freely traded and Dian Swastatika near 4.24 percent.
- The May 29 rebalancing could force index trackers to sell, with Goldman Sachs estimating about $1.6 billion in outflows, some forecasts near $2.5 billion, and foreign investors already selling about $2.2 billion this year.
- Indonesia has raised free-float and disclosure rules, regulators said trading looked orderly, and investors said the cull could improve market quality as MSCI’s June accessibility review decides the next step.