IHSG slips on MSCI free-float methodology fears as foreign selling risk looms

Indonesia’s benchmark stock index ended the week lower on Friday, pressured by market concerns over a planned methodological change by Morgan Stanley Capital International (MSCI) that could affect how free float is calculated for Indonesian listed firms.

The Indonesia Stock Exchange’s (BEI) Composite Stock Price Index (IHSG) fell 41.16 points, or 0.46 percent, to close at 8,951.00. The LQ45 index, which tracks 45 of the most liquid stocks, slipped 1.51 points, or 0.17 percent, to 873.59.

“The IHSG’s decline was partly driven by anticipation of MSCI’s methodology for calculating free float for Indonesian stocks, which is feared to lead to foreign selling pressure—especially in stocks largely owned by institutions or conglomerate groups,” Phintraco Sekuritas’ research team said in a note on Friday.

MSCI is considering revising its free-float calculations for Indonesian issuers seeking inclusion in global indices. As part of the process, the index provider has sought feedback on using the Monthly Holding Composition Report from the Indonesian Central Securities Depository (KSEI) as an additional reference in determining a stock’s free float.

The public consultation closed on Dec. 31, 2025. MSCI is expected to publish the consultation outcome before Jan. 30, 2026, and if approved, the change would take effect in MSCI’s index review in May 2026.

The proposed free-float methodology change is seen as crucial for Indonesian issuers aiming to enter MSCI benchmarks, which can influence international portfolio allocations.

Currently, the Indonesia Stock Exchange receives ownership reports only for holdings above 5 percent. KSEI data, however, also captures shareholders below the 5 percent threshold, offering a more detailed picture of public ownership structures.

Across Asia, regional stock markets closed higher, supported by the Bank of Japan’s decision to keep its policy rate unchanged at 0.75 percent ahead of the general election scheduled for Feb. 8, 2026.

In the bond market, the yield on Japan’s 40-year government bonds fell 4 basis points to 3.953 percent, while shorter-dated Japanese bonds posted yield increases.

In Jakarta, the IHSG opened lower and stayed in negative territory through the end of the first trading session. The benchmark remained in the red through the second session, closing down for the day.

By sector, the IDX-IC sectoral index showed only two gainers. The healthcare sector led with a 0.83 percent rise, followed by infrastructure, which added 0.12 percent.

Nine sectors ended lower, led by transportation and logistics, which fell 2.23 percent. Consumer cyclicals slid 2.17 percent, while industrials declined 1.57 percent.

The day’s top gainers were RMKO, BAIK, LPCK, TOOL and JAST. The biggest decliners were PTRO, ZATA, DAAZ, MPPA and MAHA.

Trading activity totaled 3,319,645 transactions, with 64.15 billion shares changing hands for a value of Rp32.04 trillion (US$). Some 191 stocks advanced, 495 declined and 118 were unchanged.

Elsewhere in the region, Japan’s Nikkei rose 108.70 points, or 0.20 percent, to 53,797.60; China’s Shanghai Composite gained 13.58 points, or 0.33 percent, to 4,136.16; Hong Kong’s Hang Seng climbed 119.54 points, or 0.45 percent, to 26,749.50; and Singapore’s Straits Times jumped 63.13 points, or 1.31 percent, to 4,891.45.

Indonesianpost.com | Antara