Indonesia's 3 richest tycoons lose $5.9B in wealth amid record stock rout
The combined net worth of the three richest people in Indonesia fell by roughly US$5.9 billion following a record two-day stock rout sparked by MSCI’s warning of a market downgrade.
Three of Indonesia's wealthiest tycoons experienced a significant loss in their net worth due to a record stock market decline. Indonesia was considered for standalone market status by a global index provider, which would have resulted in a more severe downgrade. This warning triggered a sharp sell-off, with the benchmark Jakarta Composite Index plummeting 11.6% on Friday and 3.6% on Monday, marking the steepest two-day decline ever recorded. The combined losses of the three billionaires amounted to $5.9 billion.
Robert Budi Hartono, a cigarette mogul, saw his net worth drop from $15.5 billion to $12.4 billion, while Prajogo Pangestu, a timber-to-energy tycoon, and Low Tuck Kwong, a Singapore-born coal billionaire, experienced declines of $2.2 billion and $600 million, respectively. Over the course of the year, Indonesia's equity market became the worst-performing globally, with its stocks plunging nearly 40%.
Indonesia has been working to address MSCI's concerns, which include issues with shareholder disclosure rules, market transparency, and the risk of improper trading activity. The market has shown some signs of recovery after the regulator implemented measures to tackle these concerns. However, MSCI still has reservations about market dysfunction, such as suspected coordinated trading behavior and a lack of evidence of effective enforcement.
In response to the market turmoil, Indonesia's financial regulator announced sanctions against those involved in alleged trading manipulation related to three firms. The fines totaled 2.1 trillion rupiah. Additionally, the Indonesia Stock Exchange decided to remove companies with highly concentrated ownership from the benchmark index. The index recovered some of its losses on Tuesday, as analysts considered these measures as a positive step.
Some of the tycoons have taken steps to diversify their wealth outside of Indonesia. For instance, the Hartono family invested a minimum of US$1.4 billion abroad, while Prajogo's Barito Renewables Energy made an offer for a Philippine geothermal company, and Chandra Asri Pacific acquired parts of an Australian mining company in Malaysia and Singapore. Meanwhile, Low and his daughter recently sold a stake in his coal mining firm to another Indonesian tycoon.
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