Indonesian stocks recover as authorities move to address MSCI concerns
Hafizh Meinovando/iStock Editorial via Getty Images
Indonesia's stock market rebounded on Tuesday, ending its two-day losing streak, after authorities announced steps to stave off a potential downgrade by MSCI (MSCI).
The benchmark Jakarta Composite Index rose more than 5% on Tuesday, a day after reaching a six-year low.
Following a virtual meeting with MSCI (MSCI), the Indonesia Stock Exchange said it will exclude stocks with highly concentrated ownership from its benchmark index. These stocks currently account for 18% of the Jakarta Composite Index weight.
The move aims "to provide a more representative picture of the Jakarta Composite Index's movements, given the potential risks associated with high shareholding concentration stocks," Indonesia Stock Exchange CEO Jeffrey Hendrik said.
The bourse will also enforce the expansion of shareholding disclosures by specifying whether investors owning at least 1% of a company's shares are affiliated with the firm.
MSCI (MSCI) last week flagged "persistent opacity in shareholding structures" as one of its concerns behind considering reclassifying the MSCI Indonesia Indexes from "emerging market" to "standalone market" status.
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