Kuya Food Express JAKARTA – Global index provider FTSE Russell is once again taking decisive action concerning Indonesian stocks flagged for high shareholding concentration (HSC).
In its “Indonesia-index treatment for June 2026 index review” released on Wednesday, May 13, 2026, the firm confirmed its intent to remove stocks categorized as HSC from its indices. This delisting will even employ a “price to zero” valuation mechanism, signaling a strong stance against such concentrated ownership.
This pivotal decision sends a potent message to the Indonesian capital market. FTSE Russell posits that stocks exhibiting excessively concentrated ownership are highly susceptible to liquidity issues, making them challenging for global investors, particularly those tracking its indices, to trade effectively.
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Despite this firm stance, FTSE Russell’s latest announcement regarding Indonesia’s index treatment for the June 2026 review acknowledged efforts by Indonesian capital market authorities. These authorities have implemented several reforms aimed at bolstering market transparency, a key concern for global investors.
Among these commendable steps are the public disclosure of stock ownership data exceeding 1%, the publication of a dedicated list for stocks with high ownership concentration (HSC list), and enhanced reporting standards for investor classification. Such initiatives underscore Indonesia’s commitment to a more transparent market environment.
Nevertheless, FTSE Russell maintains that the current market conditions necessitate a more extended period of observation. This cautious approach reflects the ongoing complexities and the need for sustained improvements.
Consequently, the influential global index institution has opted to defer several significant adjustments to Indonesian stocks, delaying them until at least the September 2026 review. This postponement suggests a careful, measured pace for market integration.
For the upcoming June 2026 review, FTSE Russell will only proceed with limited, routine updates. These include changes in industry classification, adjustments to outstanding shares, reductions in free float, and the removal of specific issuers due to corporate actions like spin-offs or adherence to ESG factors.
Crucially, comprehensive index re-ranking processes, expansions in free float, and the integration of new stocks via Initial Public Offerings (IPOs) remain on hold. This highlights the institution’s continued vigilance regarding broader market stability.
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FTSE Russell’s immediate focus is acutely trained on stocks bearing the HSC status. In line with its stringent free float restriction guidelines, any stock receiving a high ownership concentration warning from regulatory bodies stands to be excluded from its indices, ensuring market integrity.
Feedback gathered from market participants further underscores the gravity of the situation. FTSE Russell noted that the liquidity of these affected stocks is projected to deteriorate significantly as the June 2026 review approaches, posing a challenge for investors.
Such a downturn in liquidity could severely impede global institutional investors, making it exceptionally difficult for them to divest from these stocks fairly without triggering substantial downward pressure on market prices. This scenario could lead to widespread instability.
According to FTSE Russell, this precarious situation has the potential to compromise index integrity and hinder investors’ ability to accurately replicate the index performance. Thus, all stocks identified with HSC status will be definitively removed during the June 2026 review, employing the stark “price to zero” methodology, effective from trading on June 22, 2026.
While FTSE Russell has not yet disclosed the specific stocks earmarked for this removal, the institution has reassured the market that a comprehensive announcement detailing the affected issuers will be made available in due course.
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Moving forward, FTSE Russell has affirmed its commitment to closely monitoring the evolution of the Indonesian capital market. The institution pledges to maintain constructive dialogues with domestic authorities, fostering an environment conducive to market development and stability.
The ultimate decision regarding the potential full normalization of Indonesia’s index treatment—a highly anticipated outcome for many stakeholders—is slated for careful consideration ahead of the September 2026 review. This upcoming review will be crucial for the market’s trajectory.
Summary
FTSE Russell will remove Indonesian stocks with high shareholding concentration (HSC) from its indices, effective June 2026. This delisting will utilize a “price to zero” valuation mechanism, reflecting concerns about liquidity issues and difficulties for global investors. Despite acknowledging reforms by Indonesian authorities aimed at improving market transparency, FTSE Russell believes more observation is needed.
Consequently, significant adjustments to Indonesian stocks have been deferred until at least the September 2026 review, with only routine updates scheduled for June 2026. Stocks identified with HSC status are expected to see deteriorating liquidity, potentially hindering index replication and creating instability. A full announcement of affected issuers will be made in due course.