Indonesia bourse to include independent observers in determining stocks with highly concentrated ownership

Jakarta - Indonesia's stock exchange plans to involve independent observers in a committee tasked with identifying stocks with highly concentrated ownership that will be removed from the main index. Jeffrey Hendrik, the exchange's chief, announced the move during a press conference on Monday. Hendrik also stated that the exchange will immediately investigate any suspected share price manipulation, previously only issuing warnings.

This announcement follows MSCI's warning earlier this month that it may demote Indonesia's stock exchange to a standalone market status due to insufficient efforts to curb coordinated trading practices. The exchange announced its decision to exclude stocks with high shareholding concentrations starting November 2. Hendrik said the independent committee, which will include academics and F. Chapman Taylor representing foreign investors, will oversee the process.

The Indonesian market has remained resilient since MSCI's announcement, which triggered the country's largest two-day stock selloff on record. Financial regulator Hasan Fawzi explained that the exchange will continue to allow share buybacks without requiring approval from a general shareholders meeting until June 2027. The stock exchange must improve its methodology for compiling the list of companies with high shareholding concentration.

President Prabowo Subianto previously told his cabinet that MSCI was attempting to intimidate Indonesia, but vowed the country would not be intimidated, delivering a defiant response to the downgrade warning in his first public reaction.