Jakarta (ANTARA) - Head of Research at PT Korea Investment And\nSekuritas Indonesia (KISI) Muhammad Wafi has assessed that the 15 per\ncent minimum free float requirement will, in the medium and long term,\ndrive fairer share price formation.<\/p>\n
His reasoning is that a more dispersed share ownership structure\nwould make price manipulation by market makers considerably more\ndifficult.<\/p>\n
\u201cIn the medium to long term, the fundamental impact will guarantee\ndeeper trading liquidity. Price stability will also be far healthier, as\na more dispersed ownership structure makes shares increasingly difficult\nto manipulate or unilaterally control by market makers, resulting in\nmore optimal fair price formation,\u201d Wafi told ANTARA in Jakarta on\nTuesday.<\/p>\n
On the other hand, in the short term, he said the 15 per cent minimum\nfree float requirement has the potential to trigger volatility and\nselling pressure in the Indonesian stock market.<\/p>\n
\u201cThe market will anticipate a flood of new supply that could depress\nthe share prices of affected issuers,\u201d Wafi said.<\/p>\n
Wafi stated that the greatest challenge of the 15 per cent minimum\nfree float requirement is the need for sufficient domestic market\nabsorption capacity.<\/p>\n
If corporate actions are carried out within close proximity of one\nanother, he said, there is a risk of triggering a crowding out\neffect.<\/p>\n
\u201cAnother structural challenge is the reluctance of controlling\nshareholders to undertake corporate actions due to various factors,\u201d\nWafi said.<\/p>\n
The Indonesia Stock Exchange (IDX) itself has estimated that\napproximately Rp187 trillion in liquidity would need to be absorbed by\nthe market for 267 listed companies to upgrade from the current 7.5 per\ncent free float to 15 per cent.<\/p>\n
Wafi assessed that institutional investors would respond positively,\nas the policy addresses global standard demands that have long\ncriticised the lack of investability and transparency in the Indonesian\nstock market.<\/p>\n
\u201cThis is a catalyst for attracting capital inflow back,\u201d Wafi\nsaid.<\/p>\n
Meanwhile, he continued, retail investors would respond\noptimistically but cautiously, as they would be assisted by the\nFinancial Services Authority\u2019s (OJK) plan to assign special notations to\nissuers whose free float remains below 15 per cent.<\/p>\n
\u201cHowever, retail investors must also be able to calculate the\npotential dilution from the corporate actions of these issuers,\u201d Wafi\nsaid.<\/p>\n
Furthermore, for issuers, Wafi reminded them that they must design\nelegant corporate actions so that the addition of public shares does not\ndamage their share prices on the secondary market.<\/p>\n
The IDX itself is prioritising the initial implementation phase of\nthe 15 per cent minimum free float for 49 large-capitalisation (big cap)\nissuers.<\/p>\n
\u201cThe heaviest impact will be on their reputation and listing\ncontinuity,\u201d Wafi said.<\/p>\n
During the transition period, he warned that issuers slow to act\nwould receive special notations, which would cause their shares to be\navoided by institutional investors.<\/p>\n
\u201cThe OJK and IDX have also prepared a firm exit policy for\ndelisting,\u201d Wafi said.<\/p>\n
As is known, the IDX has made adjustments to Regulation Number I-A\nconcerning the Listing of Shares and Equity Securities Other Than Shares\nIssued by Listed Companies.<\/p>\n
One of the regulatory adjustments to be made by the IDX covers market\ndeepening, with the formulation of a new policy raising the minimum free\nfloat threshold for listed companies to 15 per cent.<\/p>\n
The implementation of these regulatory adjustments is planned for\nMarch 2026.<\/p>\n
In conjunction with this, the OJK is preparing plans to assign\nspecial notations to issuers that have not yet met the 15 per cent\nminimum free float requirement.<\/p>\n
Acting Chairperson of the OJK Board of Commissioners Friderica\nWidyasari Dewi, known as Kiki, explained that the special notation would\nserve merely as a marker, not meaning that issuers would be moved to a\nseparate board, thereby making it easier for investors to select shares\nas a form of investor protection.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/analyst-15-per-cent-free-float-requirement-to-drive-fair-share-price-formation-1771929155", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }