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| Jakarta Composite Index | |
|---|---|
| Name | Jakarta Composite Index |
| Other names | IHSG |
| Operator | Indonesia Stock Exchange |
| Launch date | 1982 |
| Base value | 100 |
| Base date | 1982-01-01 |
| Constituents | all listed common stocks on Indonesia Stock Exchange |
| Capitalization | variable |
| Currency | Indonesian rupiah |
Jakarta Composite Index is the principal stock market index of the Indonesia Stock Exchange, representing the aggregate performance of listed equities in Jakarta. It serves as a benchmark for institutional investors including Bank Indonesia, Asian Development Bank, International Monetary Fund, and asset managers such as BlackRock and Vanguard Group. The index underpins derivative contracts and investment products offered by entities like Securities Commission-level regulators and regional exchanges including the Singapore Exchange and Hong Kong Stock Exchange.
The index aggregates price movements across all common shares listed on the Indonesia Stock Exchange in Jakarta and is denominated in Indonesian rupiah. It functions as a market-capitalization-weighted indicator used by portfolio managers at firms such as Goldman Sachs, Morgan Stanley, Citi, Nomura Holdings, and Deutsche Bank. Major listed companies contributing to index dynamics include Bank Central Asia, Bank Mandiri, Bank Rakyat Indonesia, Telkom Indonesia, Astra International, Unilever Indonesia, and Pertamina Hulu Energi. Market participants include institutional investors from Japan Exchange Group, sovereign wealth funds like Government Pension Investment Fund (Japan), regional asset managers, and local brokerage houses.
The index traces roots to price-collection mechanisms established during the transition from the Jakarta Stock Exchange and the Surabaya Stock Exchange consolidation into the modern Indonesia Stock Exchange. Key historical inflection points include the Asian financial crisis of 1997–1998, regulatory reforms influenced by the Bali Democracy Forum era, the introduction of electronic trading systems modeled after the NASDAQ and London Stock Exchange, and post-crisis restructuring guided by advisers from the World Bank and International Monetary Fund. Milestones include market liberalization attracting listings from conglomerates such as Salim Group and Sinar Mas Group, privatizations involving Pertamina, and corporate governance reforms following guidance from the Organisation for Economic Co-operation and Development and International Finance Corporation.
Constituents comprise all ordinary shares listed on the Indonesia Stock Exchange excluding certain instruments like preferred shares and rights issues; large constituents include Bank Central Asia, Telkom Indonesia, Astra International, Unilever Indonesia, and Bank Mandiri. The index is calculated as a free-float market capitalization–weighted series, a methodology comparable to indices like the FTSE 100, S&P 500, and MSCI World Index. Corporate actions such as stock splits, dividends, and mergers involving companies like Garuda Indonesia, PTT Lubricants, or Adaro Energy trigger adjustments handled by exchange committees similar to practices at the New York Stock Exchange and Euronext. Index governance involves listing rules influenced by regulators such as Otoritas Jasa Keuangan.
Trading occurs on the Indonesia Stock Exchange electronic trading platform during sessions aligned with regional markets: pre-opening, regular trading, and post-closing runs, with hours coordinated relative to Asia/Pacific schedules and overlap with markets such as the Singapore Exchange and Hong Kong Stock Exchange. Market microstructure includes continuous order-driven matching, market makers for certain securities, and clearing and settlement functions administered by the Indonesia Central Securities Depository and clearing houses using practices similar to CLS Bank International and Euroclear.
Performance has reflected macroeconomic cycles, including shocks tied to the Asian financial crisis, the Global Financial Crisis, commodity cycles affecting Freeport-McMoRan-linked firms, and domestic policy shifts under administrations like Joko Widodo. Variants and related indices include sectoral indices (banking, consumer goods, infrastructure), small-cap indices, and total-return series analogous to the MSCI Indonesia Index and sector benchmarks used by asset managers such as Schroders and Allianz Global Investors. Exchange-traded funds and futures products reference the index for passive strategies offered by providers like iShares and regional brokers.
The index functions as a barometer for investor sentiment toward major Indonesian corporates such as Telkomsel-affiliated firms, conglomerates like CT Corp, and natural-resource companies operating with partners including Freeport-McMoRan and BHP. Movements in the index influence capital-raising capacity for public companies, affect valuations for mergers and acquisitions involving groups such as Astra International and Salim Group, and interact with sovereign credit considerations assessed by agencies like Moody's Investors Service and Standard & Poor's. Foreign portfolio flows tracked by institutions including the World Bank and Asian Development Bank correlate with index performance and exchange-rate dynamics monitored by Bank Indonesia.
Critics highlight concentration risk where heavyweights such as Bank Central Asia and Telkom Indonesia dominate market capitalization, creating susceptibility to single-firm shocks observed during episodes like the Asian financial crisis and sector-specific downturns affecting Pertamina-related entities. Other controversies involve corporate governance disputes at conglomerates including Sinar Mas Group and Lippo Group, regulatory responses from Otoritas Jasa Keuangan, and transparency concerns raised by international investors and organizations like the International Monetary Fund and Transparency International regarding listings, insider trading allegations, and enforcement lapses.
Category:Stock market indices