Without MSCI Rebalancing, Analysts Highlight Energy Stock Opportunities for Retail Investors

JAKARTA, KOMPAS.com - Morgan Stanley Capital International (MSCI) has frozen the rebalancing of Indonesian stocks until May 2026, which is deemed to affect the direction of foreign fund flows in the domestic market.

Retail investors are advised to be more selective in monitoring sectors that remain attractive, especially amid ongoing volatile global dynamics.

Investment Specialist at PT Korea Investment and Sekuritas Indonesia (KISI), Ahmad Faris Mu’tashim, states that the energy sector remains a primary choice for investors this year, particularly driven by strong global catalysts from oil and gas and coal.

According to him, geopolitical tensions between the United States and Iran, culminating in disruptions in the Strait of Hormuz area, have triggered major disruptions to the global energy supply. This route has long been a crucial point as it handles around 20 percent of global oil distribution, so any disruption directly impacts energy price surges and supply instability.

“For this year, the sector that remains attractive is the energy sector, with oil and gas and coal as the main catalysts from the energy crisis effect due to the US-Iran conflict causing damage to oil and gas infrastructure around the Strait of Hormuz,” said Faris when contacted by Kompas.com on Wednesday (22/4/2026).

“Investors can pay attention to stocks like MEDC and HRUM,” he explained.

Faris also assesses that shares of other issuers can still rise with MSCI sentiment, but it depends on the potential inflow or foreign fund entry calculated from the free float market cap. Issuers with large free floats usually have a better chance of receiving fund flows, thus making their price movements stronger.

Additionally, price increases often occur before the effective rebalancing date due to frontrunner actions by institutions entering earlier. Therefore, not all stocks rise simultaneously; only those deemed likely to receive inflows tend to move first.

In the context of MSCI, frontrunners refer to investors buying stocks before the effective rebalancing date, as they anticipate inflows. As a result, prices often rise beforehand before the official decision takes effect.

“For stock price increases, we need to look at the potential inflow calculated based on free float market cap. Thus, each issuer that is included can differ, and sometimes there are frontrunner actions from institutions making decisions beforehand before the effective date,” explained Faris.

However, with both entering the high shareholding concentration category or stocks with high concentration (HSC), the opportunity to remain in the index is closed.

MSCI itself requires stocks entering the index to not have excessively high ownership concentration levels. This condition could trigger outflows at least until the effective date, as fund managers referencing the MSCI index will adjust their portfolios.

This selling action is a mandatory sell, so pressure on DSSA and BREN stock prices tends to occur gradually as the funds exit.

“For the case of DSSA and BREN, both issuers are constituents of the MSCI Indonesia Standard Cap. This will certainly trigger outflows at least until the effective date because both issuers fall into the high shareholding concentration as per yesterday’s announcement, which requires that stocks potentially included must not be on the HSC list, meaning there will be weakening along with mandatory sells by fund managers referencing the MSCI index,” he continued.