By Stefanno Sulaiman and Gayatri Suroyo
JAKARTA, Feb 20 (Reuters) – Nearly one in three companies on the Indonesia Stock Exchange, including some of its biggest listings, would be affected by capital market reforms pledged by Jakarta, potentially unleashing over $11 billion in new share supply, according to a Reuters analysis of public data and an IDX official.
Indonesia announced a series of capital market reforms after index provider MSCI in late January warned the country risked a downgrade to frontier status as early as May due to market opacity that may have facilitated price manipulation.
A key part of the plan is raising the minimum free float level for listed companies to 15% from 7.5%.
That would mean 267 companies, out of over 900 listed on the IDX, would have to release new shares, have their controlling shareholders sell some of their stakes, or buy back equity to go private, according to an IDX assessment as of end-2025.
Assuming no company chooses to delist, they would have to offer a combined 187 trillion rupiah ($11.08 billion) worth of shares to the public, IDX director I Gede Nyoman Yetna said.
“If properly designed, the 15% free float increase could become a turning point for the quality … and the attractiveness of Indonesia’s capital market,” said Liza Camelia Suryanata, head of research at Kiwoom Sekuritas Indonesia.
“However, if executed without sensitivity to liquidity dynamics and price stability, short-term volatility risks could erode the very confidence this reform seeks to build,” she said.
Exchanges around the world have long grappled with how to encourage trade in tightly-held stocks. In Japan, a slew of corporate governance reforms, including asking companies to maintain a 35% minimum free float, has helped the market as a whole and put it on the radar of many foreign investors.
Reuters analysed publicly available data to see which Indonesian companies would be most affected.
THE TOP 5
Topping the list is Indonesian giant Barito Renewables Energy, IDX’s biggest company by market capitalisation. The company, owned by Indonesian billionaire Prajogo Pangestu, will have to sell more than $1.8 billion worth of shares to meet the 15% threshold, according to Reuters analysis of publicly available data.
The other names in the top 5 are Bank Permata, whose majority shareholder is Bangkok Bank, which could have to offer around $450 million in new shares, and cigarette maker Hanjaya Mandala Sampoerna, controlled by U.S. tobacco giant Philip Morris International, at around $420 million.
State lender Bank Syariah Indonesia would need to offer up about $350 million worth of shares, while Indonesian tycoon Lim Hariyanto’s nickel business, Trimegah Bangun Persada, would need to offer up around $230 million in secondary offerings.
The companies did not respond to Reuters’ request for comment.
Indonesia’s interim chief capital market supervisor at the Financial Services Authority (OJK) Hasan Fawzi has indicated companies could be given three years to transition, though exact details are pending.
A BIG CHALLENGE
Analysts say the process will be a tough test for companies and warn oversupply could exert significant pressure on valuations.
The free float increase was “good in terms of transparency, but will our market be able to cope? The supply of shares will increase but will investor demand also increase?” lamented one stock trader, who declined to be identified because they were not authorised to speak to media.
Regulators must take into account that not all companies would be ready immediately, said Gilman Pradana Nugraha, executive director of the Indonesian Issuers Association.
“Adjusting free float is not just a matter of technical corporate action, but also about our strategy to manage valuation and stock prices’ stability,” he said.
“A timeline that is too short could potentially trigger unhealthy selling pressure,” Gilman said.
CREATING DEMAND
MSCI’s warning has already prompted some international investors to reduce exposure to Indonesian equities, with confidence in the country’s bond and money markets also waning due to concerns over fiscal health and central bank independence.
To help absorb the additional share supply, authorities plan to more than double the equity investment cap for insurance firms and pension funds to 20%.
Support could also come from sovereign wealth fund Danantara, which has pledged to buy stocks using its $14 billion fund, as well as Indonesia’s social security fund BPJS Ketenagakerjaan, which manages over $53 billion in assets.
There could also be demand from retail investors. Retail transactions made up half of the 18 trillion rupiah of 2025’s daily average trading volume.
The chief executive of brokerage Sucor Sekuritas, Bernadus Wijaya, said if MSCI keeps Indonesia’s “emerging market” status in May, there would be demand from returning foreign investors as well.
BEYOND FREE FLOAT
Still, some analysts said the quality of the overall market reforms, including market supervision, ownership transparency and trading integrity, would be closely watched, instead of just hitting a higher free-float level, especially with Indonesia’s “goreng-goreng saham”, or stock frying to pump up prices, under the spotlight after the MSCI warning.
Some analysts also caution that even with a higher free float, ownership of some firms could remain concentrated in a few hands.
($1 = 16,885.0000 rupiah)
(Reporting by Gayatri Suroyo and Stefanno SulaimanEditing by Gibran Peshimam and Kim Coghill)
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