Several companies have come under scrutiny following global index provider MSCI’s decision to temporarily freeze Indonesia’s February review, citing concerns over market accessibility and transparency. In response to the announcement, the Financial Services Authority (OJK) and the Indonesia Stock Exchange (IDX) have stepped up due diligence and trading surveillance to address potential vulnerabilities. As this closer monitoring unfolds, it has brought renewed attention to sharp and unexplained price movements in several counters, most notably PT Sanurhasta Mitra (MINA), which had previously been flagged for unusual market activity.

Against this backdrop, the situation carries a measure of irony. Several stocks affiliated with businessman Happy Hapsoro, including PT Raharja Energi Cepu (RATU), had been widely expected to enter MSCI indices based on announcements and index compositions published last year. Some market participants have suggested that the rapid rise and prominence of these stocks may have contributed to MSCI’s heightened scrutiny of Indonesia’s free float and ownership transparency. Parties linked to the companies have rejected allegations of manipulation, maintaining that the price movements reflect market demand and underlying fundamentals rather than coordinated activity.

The controversy has since moved beyond market participants and regulators, prompting responses at the highest levels of government. Senior officials at the OJK and the IDX have pledged regulatory refinements and closer engagement with global index providers. Coordinating Economy Minister Airlangga Hartarto has sought to reassure investors that corrective measures are underway.

President Prabowo Subianto has also addressed the issue, emphasizing that Indonesia’s macroeconomic fundamentals remain strong and that the turbulence stems from technical market issues rather than structural economic weaknesses. Despite these assurances, the episode has weighed on sentiment. Foreign outflows and heightened volatility highlight how quickly investor confidence can erode when governance concerns emerge.

Adding to the challenge, FTSE Russell, a major global index provider and competitor to MSCI, announced that it would postpone its own review of Indonesian equities. The delay removes what could have been a near-term opportunity for Indonesia to offset MSCI’s freeze with a more favorable assessment from another benchmark provider. Instead, the postponement reinforces perceptions of sustained international scrutiny and prolongs uncertainty at a time when authorities are seeking to restore credibility and stabilize market expectations.

At the center of MSCI’s concerns is a technical but critical concept known as free float. Free float refers to the proportion of a company’s shares that are genuinely available for public trading. MSCI has questioned whether reported free float figures in Indonesia consistently reflect shares that are truly accessible to investors, particularly international and retail investors, especially in cases where ownership structures are concentrated or linked to affiliated parties. For an index provider, such discrepancies pose a serious issue. If shares classified as public are effectively tightly held or indirectly controlled, the market may appear deeper and more investable on paper than it is in practice.

Free float plays a central role in capital market health because it determines liquidity, or how easily investors can buy or sell shares without triggering sharp price swings. A market with sufficient genuine free float enables institutional investors to enter and exit positions efficiently, supports credible price discovery and reduces volatility caused by thin trading. Conversely, when effective free float is limited, even modest inflows or outflows can generate disproportionate price movements, raising risks for both passive index funds and active managers.

Liquidity is especially important for foreign investors, who must also navigate political and regulatory risks in markets that are not their own. Global asset managers require confidence that they can adjust positions without materially affecting prices, particularly during periods of stress or volatility.