Indonesia’s IDX to Exclude High-Concentration Stocks from Jakarta Composite Index, Impacting 80 Firms and 18% of Weighting

The Indonesia Stock Exchange (IDX) is preparing to remove all shares classified as having high shareholding concentration (HSC) from calculations of its main equity benchmark, the Jakarta Composite Index (JCI), a change that will affect 80 listed companies.

Together, those 80 stocks make up about 18% of the JCI’s current weighting, meaning their exclusion could materially reshape how the index reflects the broader market and how many investors track Indonesian equities.

IDX’s move comes as MSCI, one of the world’s most influential index providers, weighs whether to reclassify Indonesia from an emerging market to a so-called standalone market. Such a shift would carry significant implications for international portfolio managers, particularly funds that follow MSCI benchmarks and allocate capital based on index membership.

According to the exchange, the decision to strip HSC stocks from index calculations followed an online meeting with MSCI held on Monday afternoon. The timing underscores the pressure facing Indonesian market authorities as they seek to address concerns that can influence index eligibility, such as investability, free float, and market accessibility.

High shareholding concentration generally refers to companies where a large portion of shares is tightly held by a small group of owners, limiting the amount of stock readily available for trading. When the public “free float” is constrained, it can reduce liquidity and make it harder for large institutional investors to build or exit positions without moving prices—issues that index providers scrutinize when determining a market’s classification.

The planned index methodology change signals an effort by IDX to align the JCI more closely with investable market conditions and to respond to global standards that shape cross-border capital flows. With HSC firms removed, the JCI’s composition and sector balance may shift, potentially changing how passive and active strategies benchmark their Indonesian exposure.

Why it matters

Any alteration to the JCI affects how Indonesia is represented in portfolios tied to index performance, from domestic retirement products to foreign funds. Excluding 80 high-concentration stocks—nearly a fifth of the index’s weighting—could change liquidity patterns and investor demand for the remaining constituents. The next key development to watch is MSCI’s decision on Indonesia’s market status, which could influence future inflows and outflows of international capital.