Indonesia expels tightly held groups from flagship Jakarta index

By the Editorial Team · Tuesday, October 20, 2026

Indonesia's stock exchange plans to exclude companies with concentrated ownership from its Jakarta Composite Index to address MSCI's concerns and avoid a potential market downgrade. This decision affects nearly 18% of the index's market capitalization and aims to improve market transparency, though experts doubt it will fully resolve MSCI's issues with governance and liquidity.

Indonesia's stock exchange announced plans to remove companies with concentrated share ownership from its flagship Jakarta Composite Index (JCI) in an effort to address concerns raised by MSCI, a major global equity index provider. The move comes after MSCI indicated it might downgrade Indonesia’s market status, which could lead to significant capital outflows.

The companies targeted for removal represent nearly 18 percent of the JCI’s total market capitalization. Although these stocks will remain tradable, their price changes will no longer influence the JCI’s overall performance, the Indonesia Stock Exchange (IDX) said following a virtual meeting with MSCI officials. The IDX did not specify the timeline for implementing the removals.

MSCI’s warning reflects growing unease over the country’s market accessibility, liquidity, and transparency, particularly related to the dominance of substantial shareholders in certain firms. In January, MSCI signaled the possibility of reclassifying Indonesia from an emerging market to a frontier market—a category perceived as carrying higher risks. Should MSCI’s downgrade materialize, Indonesia would join a small group of standalone markets that includes Argentina, Lebanon, and Zimbabwe.

The IDX’s chief executive, Jeffrey Hendrik, stressed that while affected stocks would be excluded from the composite index, they could still be actively traded on the exchange. However, the JCI experienced a sharp decline recently, dropping 3.6 percent on Monday after an 11.6 percent fall on Friday, following MSCI’s recent warning.

Analysts remain skeptical about whether removing high-concentration shares from the index will be sufficient to alleviate MSCI’s concerns. Yanuar Rizky, senior economist at the Bright Institute think tank, said the move did not fully address the core issues, emphasizing the need for broader reforms to enhance transparency and data disclosure in the market.

Among the companies identified as heavily held are Dian Swasatika Sentosa and Barito Renewables Energy, both sizable constituents of the JCI. In response to MSCI’s latest caution, the IDX has also announced steps aimed at improving market transparency and the quality of market data.

MSCI’s scrutiny underscores the challenges Indonesia faces in maintaining its status as a leading emerging market in Southeast Asia amid investor concerns over governance and shareholder protections. The exchange’s efforts signal a willingness to adapt to international standards, though it remains to be seen if these actions will prevent a downgrade.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.