Concerns around free float — the number of shares available for trading — have emerged as a flashpoint in Indonesia’s US$976 billion ($1.23 trillion) market in recent years, as investors lament that the nation’s biggest companies are thinly traded and controlled by a handful of wealthy individuals. MSCI’s decision is due to “fundamental investability issues” and investor worries over coordinated efforts to distort prices, it said in a statement on Wednesday.
(Jan 28): Indonesian stocks tumbled after MSCI Inc raised concerns about their investability and warned of a potential downgrade to frontier-market status.
The benchmark Jakarta Composite Index closed 7.4% lower on Wednesday, the biggest one-day slide in over nine months. The gauge plunged as much as 8.8% earlier in the day to trigger a 30-minute market halt. The sell-off came after MSCI said it would immediately pause some index changes, including additions, until regulators address concerns over tightly-held ownership of listed firms.
