80 HSC Stocks to Leave the IDX Composite: What Does It Mean?

The Indonesia Stock Exchange plans to remove all stocks classified under the High Shareholding Concentration framework from the IDX Composite calculation. IDX President Director Jeffrey Hendrik said that 80 HSC stocks represented approximately 18% of the index when the plan was announced on October 19, 2026.

The change will narrow the group of stocks represented by the IDX Composite. HSC shares will continue to trade on the exchange, but their price movements will no longer affect the index once the policy takes effect. The companies will also remain listed unless a separate suspension or delisting process applies.

The 18% figure has prompted an incorrect assumption that the index will automatically lose 18% of its value. Constituent changes normally require a technical adjustment so that the removal itself is not recorded as a market return. The more relevant effects involve what the index measures, how the remaining stocks are weighted, and how portfolios that use the IDX Composite as a benchmark may respond.

IDX had not disclosed the effective date, the final implementation list, or the transition methodology in the statement reported on October 19. The number of HSC stocks may also change because the classification is updated using ownership and market data.

What IDX actually announced

IDX’s statement contains two separate decisions. All HSC stocks will be removed from the IDX Composite calculation, while the affected shares will remain listed and tradable.

According to ANTARA’s report on the IDX statement, the 80 HSC stocks represented roughly 18% of the index at the time of the announcement. Their price movements will stop contributing to the IDX Composite once the policy is implemented.

The decision changes the scope of an index that IDX currently describes as measuring the price performance of all stocks listed on its Main and Development Boards. The official IDX index page identifies the calculation method as capped free float adjusted market capitalization weighted.

IDX’s plan to remove 80 HSC stocks, representing approximately 18% of the IDX Composite, from the index calculation. The shares will remain listed and tradable. Source: ANTARA, citing the IDX President Director, October 19, 2026. 

Why HSC stocks are being separated from the broad index

The HSC classification identifies companies whose share ownership is concentrated among a limited group of holders. This can leave a much smaller number of shares available for active trading than the company’s total market capitalization may suggest.

Concentrated ownership does not, by itself, establish wrongdoing by an issuer. It provides information about ownership structure, free float, and price formation risk. When the tradable supply is small, a relatively limited transaction can produce a large change in price and reported market capitalization.

IDX previously expanded its HSC methodology by introducing a price impact ratio for certain stocks with market capitalizations above IDR10 trillion. An official IDX announcement published on July 14, 2026 said that the revised method added 37 stocks, bringing the HSC total to 51 at that time.

The increase from 51 stocks in July to the 80 cited by IDX in October illustrates that the list is dynamic. Investors should always check the measurement date because lists from different periods may contain different companies and totals.

Four consequences for the index and investors

Removing HSC stocks affects index representation, individual securities, relative weights, and the ongoing MSCI consultation through different mechanisms.

A. The IDX Composite will represent a narrower universe

The IDX Composite has traditionally been presented as a broad measure covering companies on the Main and Development Boards. Excluding all HSC stocks means the index will no longer capture every stock on those boards.

The policy can reduce the influence of companies with highly concentrated ownership. A large reported market capitalization will no longer allow an HSC stock to exert a disproportionate effect on the headline index after its exclusion.

Historical comparisons will require additional context. The index series may remain continuous, but the post-change IDX Composite will represent a different stock universe from the one used before the effective date.

B. HSC shares will retain their own prices and risks

Removal from the index does not stop trading. Investors can continue buying and selling an HSC stock as long as it meets exchange requirements and is not suspended.

Liquidity, bid and offer spreads, order book depth, free float, company fundamentals, and ownership concentration will continue to determine the risk of each security. Losing its index contribution does not eliminate the possibility of gains or losses in the stock itself.

Investors should distinguish among three events:

• Index exclusion removes a stock’s price movement from the index formula.

• A suspension temporarily stops trading in the stock.

• A delisting removes the security from exchange listing under a separate procedure.

Each event has different causes and consequences.

C. The relative weight of non-HSC stocks will rise

If a group representing 18% of the index is removed, the remaining stocks must collectively form 100% of the new index after normalization. Their relative contribution rises even if their prices and share counts remain unchanged.

A higher index weight does not guarantee an equal amount of automatic buying. The portfolio effect depends on the mandate of each index fund, exchange-traded fund, derivative product, or asset manager. A portfolio that fully replicates the IDX Composite may have to adjust its holdings. A fund that uses the index only as a performance benchmark may not be required to trade in the same way.

The effective date and final methodology will determine when such adjustments become relevant. Transaction flows cannot be estimated responsibly until those details are available.

D. The MSCI consultation remains unresolved

MSCI opened a consultation on October 15, 2026, proposing to reclassify the MSCI Indonesia Indexes from Emerging Market to Standalone Market status. The process is still open, with a final decision due by June 30, 2027.

MSCI’s official announcement refers to institutional investor concerns about ownership transparency, suspected coordinated trading, enforcement consistency, and evidence that the announced reforms are producing a material effect. MSCI is also maintaining a freeze on several positive index changes for Indonesian securities and continuing to remove stocks identified under the HSC framework.

IDX’s decision may address part of the domestic index representation problem. MSCI will still assess implementation, ownership disclosures, enforcement, and the experience of institutional investors. A new policy announcement does not, on its own, guarantee that the reclassification proposal will be withdrawn.

MSCI consultation on the proposed reclassification of Indonesia from Emerging Market to Standalone Market status. Source: MSCI, October 15, 2026. 

A simple illustration of the 18% weight

A simplified calculation shows how the composition change alters index sensitivity. Assume HSC stocks account for 18% of the index and all remaining stocks account for 82%.

If the HSC group rises by 10% while the rest of the market is unchanged, its approximate contribution to the old index would be:

18% × 10% = 1.8%

The old index would theoretically rise by roughly 1.8%, before capping, corporate actions, free float changes, and other technical adjustments. Once HSC stocks are excluded, the same move would make no contribution to the IDX Composite.

Consider the reverse scenario. If non-HSC stocks rise by 1% while HSC stocks are unchanged, their contribution to the old index would be approximately:

82% × 1% = 0.82%

After normalization, non-HSC stocks would make up the entire new index. A 1% aggregate increase in that group would therefore produce an index move close to 1% in this simplified example.

This calculation illustrates weight sensitivity and is not a forecast. The actual result will depend on the final constituent list, free float factors, weight caps, index divisor, and transition procedure.

Why the index should not automatically fall by 18%

The 18% figure describes the former weight of the HSC group. It is not a forecast of the index’s decline on the implementation date.

Index providers normally adjust the divisor or base value when constituents change. This prevents a composition change from being recorded as a gain or loss even though no market transaction or price change occurred.

IDX had not published the final technical document for this change in the sources available by October 20. Investors still need information on the index divisor, reference prices, final constituent list, and treatment of stocks entering or leaving HSC status.

Information IDX still needs to publish

Four disclosures will determine the policy’s practical effect:

• The effective date for removing HSC stocks from the IDX Composite.

• The final list based on the ownership data used at implementation.

• The method for adjusting the divisor, free float factors, and weights.

• The procedure for restoring a stock that later exits the HSC category.

Investors should also examine whether index product managers change their portfolios. The headline 18% weight is insufficient to calculate trading flows because funds have different mandates, rebalancing schedules, and tracking error limits.

What to monitor after implementation

One day of index movement will not establish whether the policy has improved price representation. Several months of data will offer a more useful test.

Relevant indicators include:

• IDX Composite volatility before and after the change.

• The contribution of large capitalization stocks to daily index moves.

• Spreads, transaction value, and order book depth in HSC stocks.

• Changes in free float and the composition of shareholders owning more than 1%.

• Feedback from MSCI and institutional investors during the consultation.

• Consistency in applying HSC rules when an issuer’s ownership structure changes.

The revised index will place greater emphasis on stocks that pass the ownership concentration screen. Its usefulness will depend on methodology, data quality, and consistent implementation. The effective date and IDX’s technical documentation are now the most important next disclosures.

Disclaimer

This article is provided for information and educational purposes. It is not a recommendation to buy, sell, or hold any security. HSC classifications, index weights, constituent lists, and index rules may change. Readers should review the latest announcements from IDX, OJK, KSEI, and MSCI before making financial decisions.