Indonesia’s capital market regulator and stock exchange have moved to calm investor concerns after four Indonesian-listed companies were removed from the FTSE Global Equity Index Series (GEIS), a decision that triggered renewed pressure on the country’s stock market and foreign investor sentiment.
The Indonesia Stock Exchange, known locally as Bursa Efek Indonesia (BEI), said the removal of the companies should be viewed as a temporary consequence of broader structural reforms currently being implemented in the domestic capital market.
Acting President Director of the Indonesia Stock Exchange Jeffrey Hendrik said the adjustment made by FTSE Russell was part of a transitional phase tied to ongoing reforms led by Indonesia’s self-regulatory organizations (SROs).
“We understand this as a short-term consequence of the reform efforts we are carrying out together in Indonesia’s capital market,” Jeffrey said at the Indonesia Stock Exchange building in South Jakarta on Monday, as quoted by local media reports.
The decision by FTSE Russell came after the global index provider published its June 2026 Quarterly Review report on Saturday. The report confirmed that four Indonesian companies would be removed from the FTSE GEIS benchmark beginning June 22, 2026.
The move immediately attracted attention from market participants because inclusion in major global indexes often influences foreign fund flows into emerging markets such as Indonesia.
Foreign investors frequently use benchmark indexes like FTSE Russell and MSCI to guide portfolio allocation decisions. Companies removed from those indexes can face reduced liquidity, declining institutional interest, and increased selling pressure.
The Jakarta Composite Index (IHSG) also experienced pressure following the announcement, amid reports of foreign net selling activity in several Indonesian equities.
Despite the negative short-term reaction, Jeffrey insisted the reforms being implemented were aimed at strengthening the long-term credibility and sustainability of Indonesia’s capital market ecosystem.
“For the short term, perhaps yes, there may be an impact. But what we have been doing all this time is for the medium-term and long-term improvement of our capital market,” he said.
He added that investors with a long-term investment horizon should ultimately see the reforms as positive developments rather than signs of structural weakness.
“In essence, investing in the capital market should be long term. Investors should view this as something positive,” Jeffrey stated.
FTSE Russell’s latest review identified four Indonesian-listed companies that would be removed from different categories within the FTSE Global Equity Index Series.
One of the most notable removals involved PT Dian Swastatika Sentosa Tbk, commonly known by its stock code DSSA. The company is part of Indonesia’s powerful Sinar Mas Group and had previously been included in the large-cap category of the FTSE GEIS index.
According to FTSE Russell, DSSA was removed because the company was classified as having a high shareholding concentration. This means ownership of the company’s shares was considered too concentrated among a limited number of shareholders, reducing the level of free-floating shares available for public trading.
Free float is one of the key criteria used by global index providers to determine whether a company’s shares are sufficiently liquid and accessible for international institutional investors.
Another Indonesian company removed from the index was PT Daaz Bara Lestari Tbk, or DAAZ, which had been categorized under the micro-cap segment.
FTSE Russell said DAAZ no longer met the required free float threshold necessary for continued inclusion in the index.
Meanwhile, PT Hillcon Tbk, traded under the ticker HILL, and PT Mulia Industrindo Tbk, with ticker MLIA, were also removed after reportedly failing the surveillance screening criteria applied by FTSE Russell.
The surveillance screening process is used to assess factors including trading behavior, liquidity quality, and compliance with index eligibility standards.
FTSE Russell said the changes would become effective after the close of trading on June 19, 2026. However, the company also noted that the review results could still be revised before June 5.
“Please note that changes to the review results listed in the attachment file may still be revised until the close of trading on Friday, June 5, 2026. Starting Monday, June 8, 2026, the review results will be considered final,” FTSE Russell stated in its official announcement.
The removal of Indonesian companies from a major global benchmark comes at a sensitive moment for Indonesia’s financial markets, which have recently faced heightened volatility amid global uncertainty, capital outflows, and concerns over domestic economic momentum.
The Jakarta Composite Index has experienced fluctuations in recent weeks due to multiple external pressures, including global interest rate uncertainty, commodity price volatility, and investor caution toward emerging markets.
Foreign investor participation remains highly important for Indonesia’s equity market because overseas institutional funds account for a substantial portion of trading activity and liquidity.
Analysts say any negative signal from international index providers can affect investor psychology, particularly among passive funds and exchange-traded funds that automatically track benchmark indexes.
Still, market observers note that removals from global indexes are not always permanent and can sometimes be reversed if companies improve their free float structure, liquidity profile, or governance standards.
Indonesia’s capital market authorities have recently introduced a number of reforms aimed at improving transparency, liquidity, and market integrity.
Those reforms include adjustments to trading mechanisms, tighter oversight on unusual market activity, and efforts to enhance investor protection standards.
Officials argue that such reforms may temporarily affect certain listed companies as regulators tighten enforcement and align domestic standards with international expectations.
The Indonesia Stock Exchange has repeatedly emphasized that stronger governance and healthier trading conditions are necessary to improve the overall quality of the market in the long run.
Some analysts believe the current adjustment period could ultimately strengthen Indonesia’s position among emerging market destinations if reforms succeed in increasing investor confidence.
However, concerns remain about whether foreign institutional investors will continue to reduce exposure to Indonesian equities in the near term.
Several market participants have warned that persistent foreign outflows could continue pressuring the rupiah and domestic share prices if global risk appetite weakens further.
Indonesia’s government and financial authorities have meanwhile sought to reassure investors that the country’s macroeconomic fundamentals remain relatively stable.
Officials from Bank Indonesia and the Finance Ministry have pointed to manageable inflation levels, stable fiscal conditions, and resilient economic growth as reasons for optimism.
The response from BEI also reflects broader efforts by Indonesian regulators to prevent negative perceptions from escalating after international financial institutions issue critical assessments or adjustments involving Indonesian assets.
While the FTSE Russell review has created temporary market concerns, the stock exchange insists the reforms underway are designed to create a healthier and more competitive capital market environment over time.
For investors, attention will now turn to whether the affected companies can improve their eligibility standards and whether Indonesia’s market reforms can successfully restore confidence among global institutional funds in the months ahead.
