(May 25): Shares linked to one of Indonesia’s richest families dropped after FTSE Russell over the weekend removed the company from its global indices due to concentrated shareholding.
PT Dian Swastatika Sentosa — which is operated by the Widjaja family-controlled Sinar Mas Group — slumped as much as 14% to the lowest in two years. The stock has plunged about 88% so far this year, making it the worst performer on a Bloomberg gauge of global shares.
The removal follows a regulatory crackdown by global index providers on companies with high shareholding concentration that fail to meet minimum free-float requirements. Earlier this month, MSCI Inc excluded Dian Swastatika along with PT Barito Renewables Energy, which is linked to Indonesia’s richest man Prajogo Pangestu, and four other firms from its gauges for a similar reason.
A representative from Dian Swastatika on Monday said the company will remain focused on its business diversification efforts into energy transition and digital infrastructure sectors.
Indonesia’s stock benchmark has fallen 32% from a peak in January after MSCI warned of a possible downgrade to frontier status due to investability concerns and limited free float. Officials have subsequently ramped up a broader set of reforms such as flagging some of the largest companies with concentrated ownership and doubling minimum float levels to 15%, with a phase-in period of up to three years for some companies, to meet MSCI’s concerns.
While the measures may avert a downgrade, they may not be enough to prevent a lower weighting of Indonesian stocks in global indexes and potential outflows, analysts said. MSCI has extended its review of the market classification to June while FTSE deferred a full review of local securities until at least September to allow for an extended observation and monitoring period.
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FTSE over the weekend also removed commodities trader PT Daaz Bara Lestari, mining contractor PT Hillcon and manufacturer PT Mulia Industrindo from its small cap index. The changes will be effective from June 22, it said in a statement.
Daaz shares fell by the daily 15% limit, while Hillcon dropped as much as 7.1%.
Indonesia’s stock market has long been dominated by family-owned conglomerates that operate dozens of listed and private entities spanning industries from mining to petrochemicals. Control is typically maintained through relatives and related parties, which helps retain influence but keeps the free float low.
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FTSE had removed Barito Renewables from its indexes in September 2024, citing low shares available for public trading. That led to a plunge in the stock.
Uploaded by Magessan Varatharaja
