Indonesian Rupiah: Equity reforms and hedging against downside – MUFG

MUFG’s Michael Wan reports Indonesia has pledged new equity-market reforms to restore investor confidence, including excluding tightly owned stocks from the Jakarta Composite Index and disclosing affiliations of 1%+ shareholders. He notes these measures target transparency and coordinated trading concerns, but implementation timing and MSCI’s assessment are key, with investors still hedging against short- to medium-term Indonesian Rupiah downside.

Reforms meet lingering FX caution

"Indonesia’s pledged new equity-market reforms yesterday to restore a semblance of investor confidence, although the implications for foreign participation will depend on implementation and MSCI’s assessment."

"The exchange plans to exclude tightly owned stocks, accounting for around 18% of benchmark weight, from the Jakarta Composite Index. It will also disclose whether shareholders owning at least 1% are affiliated with the company."

"These steps address concerns over ownership transparency and coordinated trading, but implementation timelines remain pending. For now, investors have placed hedges against further IDR downside in the short-medium term."