IDX Plummets, OJK Chief Monitors Impact on Insurance and Pension Funds
The Financial Services Authority (OJK) is strengthening its oversight regarding the investment practices of insurance companies and pension funds. This includes assessing the impact of the decline in the Indonesia Stock Exchange (IDX) and the MSCI rebalancing on insurance investment portfolios.
Ogi Prastomiyono, OJK Executive Head of Insurance, Guarantee, and Pension Fund Supervision, stated that supervision of the insurance industry has previously focused more on product aspects, policy sales, and claim payments. However, in-depth supervision of the investment activities of insurance companies has not yet been conducted extensively.
According to Ogi, evaluation results indicate the existence of investment practices involving companies within the same group. These transactions are often conducted through the negotiated market mechanism rather than the regular market, which limits transparency regarding counterparties and the prices used.
He explained that the prices formed in these transactions are subsequently used as the basis for the valuation of the overall investment portfolio. This condition is a primary focus for OJK’s improvements, as investment oversight is deemed a vital component of insurance industry supervision.
“The reason for the failure of insurance companies, as it turns out, is incorrect investments. This is especially critical now, given the significant decline in the IDX,” Ogi said during his presentation in Jakarta on Tuesday.
Currently, OJK is conducting further studies to map out insurance companies affected by the market weakness, including those holding shares that were removed from the MSCI index. “We are further assessing who is affected, which companies hold the MSCI stocks that were removed, and the total value involved,” added Ogi.
As an illustration, the CEO of PT Sucor Sekuritas, Bernadus Wijaya, noted that the MSCI rebalancing sentiment through the end of May 2026 acted as a driver for foreign net selling, putting pressure on the IDX and pushing it towards the 6,000 level.
The Indonesia Stock Exchange plummeted during Wednesday’s trading. By the end of the first session, the IDX had dropped by nearly 5%, losing 306 points in a single trading session. Specifically, the IDX fell 4.94% to the level of 5,889.48.
This decline brought the IDX to its lowest level in five years. The last time the IDX closed at a level lower than today’s trading was in May 2021, during the market rebound following the pandemic-induced crash in 2020.