Indonesian stocks slide after MSCI culls six companies from its index

About this update from Pt Antam (persero) Tbk

By Gayatri Suroyo and Rae WeeGlobal index provider MSCI said it will cut six companies from its Indonesia index at the end of May as it pushes for reforms in a market it has criticised for lacking transparency, sending their shares tumbling on Wednesday.Two of the six had been flagged by Indonesian authorities for having concentrated ownership, a focus of an MSCI review into Indonesia's market due to conclude in June.MSCI highlighted transparency issues in Indonesian equities in January, sparking a market rout on fears of a downgrade to "frontier" status, which led authorities to step up efforts on market integrity reforms.On Wednesday, Jakarta's main stock index IDX:COMPOSITE dropped 1.98% to close at its lowest in over a year on MSCI's announcement, although investors and the government said it had been largely anticipated.Market participants said the culling could pave the way for MSCI to soon lift a block on adding Indonesian companies to its indexes, citing investor-friendly reforms authorities have taken."We see a high probability that Indonesia avoids a downgrade to Frontier Market status," said Ari Jahja, head of Indonesia research at Macquarie Capital.Gary Tan, a portfolio manager at Allspring Global Investments, said the rebalancing from MSCI was a "constructive step in clearing out weaker governance names, supporting Indonesia's push to improve overall market quality"."We expect continued pressure into the May 29 rebalance and early June as passive funds adjust," said Tan, who remains selectively positioned in the market, preferring higher quality and liquid names.After the market close, index provider FTSE Russell also said it will delete Indonesian shares with high shareholding concentration, effective June 22.Foreign investors have sold about $2.2 billion worth of Indonesian stocks this year, exchange data showed. Goldman Sachs estimates an outflow of about $1.6 billion due to the rebalancing.TYCOON-LINKED COMPANIES AFFECTEDMSCI removed Amman Mineral International IDX:AMMN, Chandra Asri Pacific IDX:TPIA, Dian Swastatika Sentosa IDX:DSSA, Barito Renewables Energy IDX:BREN, Petrindo Jaya Kreasi IDX:CUAN and Sumber Alfaria Trijaya IDX:AMRT from its Indonesia Index, while another 13 companies were dropped from its small cap index list.Shares in most of the affected companies tumbled around 10%. Sumber Alfaria Trijaya was an exception, unchanged ...

View stock analysis, news, and events for Pt Antam (persero) Tbk