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Indonesia Slashes Stock Price Floor to Rp1
28 Sep
Summary
- Indonesia's stock price floor drops from Rp50 to Rp1 starting Monday.
- The move aims to boost liquidity and prevent an MSCI downgrade.
- GoTo, once a high-flying startup, is among expected stock decliners.
Effective Monday, Indonesia will significantly reduce its minimum stock trading price from Rp50 to Rp1. This strategic move by Southeast Asia's largest economy aims to enhance market liquidity and price discovery.
The Indonesian stock market has been the world's worst performer this year, with its benchmark index losing over a quarter of its value. The country faces a potential downgrade by global index provider MSCI due to transparency issues and concerns over share price manipulation.
This new regulation is part of Jakarta's broader effort to overhaul its stock market and avert further investor outflows ahead of MSCI's final decision in November. While some experts believe it could foster better sentiment, others caution about potential increases in stock volatility.
Tech giant GoTo, which once debuted with a Rp338 share price and a $28 billion market capitalization, is among the companies expected to experience a substantial price drop. The company has faced intense competition, squeezing margins and impacting profitability, leading to its removal from MSCI indices.
Regulators are making a concerted effort to restore confidence in the market. While the likelihood of a downgrade is considered low, the impact of the new rule on market liquidity is expected to be modest. International investors may show interest in GoTo, but other distressed companies might have limited appeal.
