Indonesia’s stock index is likely to remain volatile and cautious in the days ahead of MSCI’s global index rebalancing announcement, according to Elandry Pratama, Branch Manager at Panin Sekuritas Pondok Indah, speaking on Tuesday (10/11). MSCI is due to announce the results of its rebalancing on Thursday (12/11), with changes taking effect from 1 December.
What MSCI will weigh
Pratama said markets will watch how MSCI assesses transparency, free float, liquidity and investability of the Indonesian stock market. There is uncertainty over the direction of the index policy, he said, and foreign investors may hold back inflows or adjust their portfolios as a result.
Large-cap banking, telecommunications and energy stocks may face adjustments to foreign allocations depending on the outcome, he said. Pratama also said clarity on capital market reform could help catalyse a recovery in investor sentiment.
Foreign flows on the day
Foreign investors booked a net buy of 115.36 billion rupiah on the Indonesian stock market during the day’s trading. Total foreign purchases came to 2.76 trillion rupiah, against total foreign sales of 2.65 trillion rupiah over the same session.
The figures offer a snapshot of foreign positioning just two days before MSCI’s announcement. Investors are now watching Thursday’s results for signs of how the index provider views the market’s transparency and liquidity.
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