Core Viewpoint - The significant drop in the Indonesian stock market on October 27 was primarily triggered by concerns over potential adjustments to the MSCI Indonesia Index's stock weightings, as indicated in a report by MSCI [1][2]. Group 1: Market Reaction - The Indonesian Composite Index experienced its largest decline in over six months, with a maximum drop of 3.8%, while the MSCI Indonesia Index fell by 2.52% [1]. - Major companies saw their stock prices decline, including PT Barito Renewables Energy Tbk (BREN) down 14.99%, PT Bank Central Asia Tbk (BBCA) down 0.91%, and PT Dian Swastatika Sentosa Tbk (DSSA) down 12.12% [1]. Group 2: MSCI Report Insights - MSCI is considering using monthly shareholder registration data from the Indonesian Central Securities Depository (KSEI) to determine the free float of Indonesian listed companies, although this plan is not yet finalized [3]. - The consultation period for this proposal is expected to last until December 31, 2025, with final results to be announced on January 30, 2026, and implemented in the index adjustments in May 2026 [3]. Group 3: Methodology Considerations - The consideration to use KSEI data stems from its detailed classification of shareholders into corporate and individual categories, although KSEI data will not be directly used for calculating free float [5]. - MSCI is also exploring a more comprehensive approach to assess Indonesian stocks, which may involve excluding scrip-based shares from the free float calculation [6]. Group 4: Potential Impact on Funds - Analysts predict that if the index is adjusted according to the new rules, the adjustment could range from 5% to 13%, implying that fund managers tracking the MSCI Indonesia Index may need to adjust their portfolio holdings by approximately 5% to 13% [7]. - There are currently five ETFs tracking the MSCI Indonesia Index, although specific sizes of these funds have not been disclosed [7][8].