FTSE Russell said it will delay a scheduled review of Indonesian equities after receiving input from an advisory committee of investment professionals that raised concerns about trading activity and the accuracy of free-float figures for Indonesian securities.
In a statement dated February 9, the index provider said the review that had been planned for March will now be postponed. The committee’s feedback cited "adverse turnover and the uncertainty in determining the accurate free float percentages of Indonesian securities" as the rationale for the pause.
As a result of the decision - effective immediately - FTSE Russell will not add newly listed Indonesian companies to its index products. It also will not carry out the usual set of updates that accompany regular index reviews, including additions, deletions or changes in weighting for constituents.
The move follows a similar step taken by rival index compiler MSCI, which also froze updates for Indonesian securities in its products. Both providers produce widely used benchmarks that are tracked by large pools of passive capital, meaning their index decisions can directly influence investor flows.
The action comes amid mounting market pressure in Indonesia. Roughly $120 billion has been removed from the benchmark Jakarta Composite since MSCI issued a warning the country could face a downgrade to frontier market status. Credit sentiment has also weakened, with Moody’s lowering its credit rating outlook the prior week.
FTSE Russell pointed to the combination of low turnover and challenges in determining free-float proportions as reasons the review could not proceed on schedule. By pausing the review and halting immediate updates, the provider is effectively preventing new listings and routine adjustments from being reflected in its index products until further notice.
Because MSCI and FTSE indices serve as reference points for many passive funds, index maintenance actions - such as freezes or postponements - have the potential to alter capital movement into and out of the affected market. In Indonesia’s case, both index freezes occurred amid scrutiny of trading and transparency in the country’s markets.
Summary
FTSE Russell has delayed a March review of Indonesian stocks after advisory committee feedback flagged low turnover and uncertainty over free-float calculations. Newly listed Indonesian securities will not be added to FTSE products and routine index updates are suspended. MSCI has taken similar action, and the developments follow significant declines in the Jakarta Composite and a downgraded credit outlook from Moody’s.