MSCI Proposal to Use KSEI’s Investor Data Sparks Market Rout as Funds Brace for Free Float Revision
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JAKARTA, investortrust.id — Indonesia’s stock market plunged on Monday after reports that global index compiler Morgan Stanley Capital International, or MSCI, plans to use investor data from the Indonesian Central Securities Depository, known locally as Kustodian Sentral Efek Indonesia (KSEI), to determine the free float of listed companies starting May 2026. The proposal, which aims to improve transparency in measuring tradable shares, has alarmed investors who fear it could tighten liquidity classification and trigger foreign fund outflows from major stocks.
The Jakarta Composite Index (IHSG) dropped 243 points, or 2.94%, to 8,028 in the first trading session, after earlier tumbling more than 4% to 7,959. Total trading value reached Rp 17.4 trillion. Analysts said the decline was broad-based, led by energy and property sectors, and exacerbated by speculation that several large-cap stocks could see their weights reduced in MSCI’s benchmarks.
According to Stockbit Sekuritas, citing a consultation paper from MSCI, the firm is collecting feedback from global and domestic investors on using KSEI’s Monthly Holding Composition Report as an additional reference for its free float computation. The data provide details on shareholders owning less than 5%, classified by investor type—information not included in companies’ mandatory disclosures to the Indonesia Stock Exchange (IDX).
“Currently, issuers in Indonesia only report shareholders with ownership of 5% or more to the exchange,” Stockbit wrote. “Meanwhile, KSEI data capture smaller holdings and categorize shareholders, providing a more granular picture of market participation.”
MSCI’s proposal goes further by suggesting that the free float ratio for each stock be based on the lowest figure derived from multiple sources—corporate disclosures, public filings, and MSCI’s own estimates—ensuring a conservative classification of tradable shares.
The consultation period runs until Dec. 31, 2025, with results expected by Jan. 30, 2026. If implemented, the new calculation method will take effect during the May 2026 semiannual index review.
Stockbit cautioned that while the plan is still under consultation, the market reaction reflects investors’ sensitivity to changes that could affect benchmark weights. Lower free float ratios would reduce the investable portion of affected stocks in MSCI indices, prompting passive funds tracking these benchmarks to cut their positions.
“The immediate concern is that a stricter free float definition would downgrade Indonesia’s weighting within MSCI Emerging Markets and potentially lead to short-term capital outflows,” said a Jakarta-based portfolio manager contacted by Investortrust.
Energy and property counters were the worst performers, down 4.45% and 4.53%, respectively, followed by industrial and infrastructure stocks. Shares in companies controlled by tycoon Prajogo Pangestu bore the brunt of selling pressure—Barito Renewables Energy (BREN) sank 12.26% to Rp 8,050, Barito Pacific (BRPT) tumbled 12.36% to Rp 3,190, and Chandra Asri Pacific (TPIA) dropped 14.78% to Rp 2,480. Dian Swastatika Sentosa (DSSA) plunged 13.42% to Rp 88,200, while Multipolar Technology (MLPT) fell 9.44% to Rp 76,750.
Despite the widespread rout, a handful of small-cap stocks hit their upper trading limits, including Bumi Benowo Resources (BRRC) up 34.82% to Rp 151, Multi Indocitra (MICE) up 25% to Rp 650, and Sunson Textile Manufacturer (SSTM) up 25% to Rp 560.
MNC Sekuritas Technical Analyst Herditya Wicaksana, known as Didit, said the selloff was consistent with prior technical projections. “As mentioned in our morning note, we anticipated a corrective move in the IHSG, and it materialized,” he said.
He added that the rumors surrounding MSCI’s recalculation plan amplified selling pressure in blue-chip counters. “There are rumors of adjustments to the MSCI free float methodology, which could prompt fund rebalancing and outflows,” he explained.
While the benchmark has posted several declines exceeding 3% in recent weeks, Didit described the volatility as “elevated but not unexpected,” noting that market sentiment remains highly reactive to global fund allocation risks.