The Indonesia Stock Exchange (IDX) has added 37 listed companies to its high shareholding concentration (HSC) list, bringing the total number of stocks under closer scrutiny to 51.
The additions follow a revision to the bourse’s HSC methodology, which now includes a price impact ratio (PIR) for companies with a market capitalisation exceeding 10 trillion rupiah ($555 million).
The move comes amid heightened scrutiny of Indonesia’s equity market after global index provider MSCI raised concerns over share ownership transparency and potential coordinated trading activity as key issues for international investors.
Under the revised framework, the IDX will use the PIR to identify potential ownership concentration. The metric assesses the extent of a stock’s price movement relative to its trading velocity, measured by average transaction volume divided by the number of shares in the public float.
Stocks with low trading velocity but significant price movements are more likely to record a high PIR and face further screening for potential ownership concentration.
IDX president director Jeffrey Hendrik said the additional metric would strengthen the HSC methodology as an early-detection tool for indications of highly concentrated share ownership.
The bourse will review the ratio every three months for listed companies with a market capitalisation exceeding 10 trillion rupiah, in line with its major index evaluation cycle. Existing trigger factors used to monitor all stocks will continue to be applied on an incidental basis.
Ricky Ho, portfolio manager at Four Capital, described the introduction of the PIR as a “positive and necessary step”, but said much would depend on the quality of the data and how the measure is implemented.
“Liquidity is not just about trading volume, but about how much prices move when capital enters or exits a stock,” Ho wrote in a note shared with DealStreetAsia.
A stock may report high turnover but still see large price swings when its effective free float is limited, he said. The PIR, in that sense, could provide a better indication of actual market depth.
But Ho pointed out that reported trading activity may not always represent genuine investor demand in Indonesia’s stock market.
“Certain brokers offer services that artificially inflate turnover through coordinated trading activity, creating what is effectively ‘ghost volume’ that does not reflect genuine investor demand,” he said.
Such activity can distort conventional liquidity measures and make a stock appear easier to trade than it actually is. Allegations of wash trading in the Indonesian market also remain unresolved, Ho said.
He cited DCI Indonesia, Bayan Resources, Ekamas Mora Republik, Mayapada Hospital, Maha Properti Indonesia, Indoritel, Sinar Mas Multiartha, and Capital Financial Indonesia as examples of large-cap stocks where market size and trading liquidity can appear disconnected.
The companies technically meet IDX free-float requirements, but their trading volumes can be extremely low or fail to reflect the depth investors might expect from stocks of their size, according to Ho.
That disconnect has long raised concerns among institutional investors, which can struggle to build or exit sizeable positions without significantly moving share prices.
The PIR could help make such distortions more visible. However, its usefulness will also depend on whether reported free-float figures accurately capture the shares that are genuinely available for trading, Ho said.
“If PIR is calculated using reported free float, while a meaningful portion of that free float is effectively unavailable for trading due to nominee structures, strategic holders or tightly controlled ownership, the metric may still overstate true liquidity,” he said. “The quality of the input data matters just as much as the methodology itself.”
Among the stocks on the HSC list are Barito Renewables Energy, Dian Swastatika Sentosa, Samator Indo Gas, Transcoal Pacific, and Habco Trans Maritima.
Barito Renewables, part of tycoon Prajogo Pangestu’s Barito group, has a shareholding concentration of 97.31%. Its controlling shareholder, Barito Pacific, owns a 64.63% stake in the company. Other companies with particularly high ownership concentration include Rockfields Properti Indonesia at 99.85%, Ifishdeco at 99.77%, and Satria Mega Kencana at 98.35%.
The IDX said it will hold discussions with companies on the HSC list on steps to improve the distribution of their shares in the market. The exchange has stressed that the HSC list serves as an early-detection mechanism for ownership concentration and forms part of its efforts to maintain orderly, fair and efficient trading.
Ho, however, believes the new metric addresses only part of the problem. Global investors also look at governance, transparency, enforcement against market manipulation, settlement efficiency and policy predictability when assessing a market, he said.
“This is a positive step, but it should be viewed as one piece of the solution rather than the solution itself,” Ho said. “If implemented in isolation, however, its impact is likely to be incremental rather than transformational.”
