Inarno Djajadi IDX President Director
Inarno Djajadi IDX President Director

IDX and MES launch IDX-MES BUMN 17 Index

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Indonesia Stock Exchange (IDX) launched a new index called IDX-MES BUMN 17 on April 29 in collaboration with the Sharia Economic Community (MES).

The index measures the price performance of 17 stocks of State-Owned Enterprises (BUMN) and their affiliates that are considered to be running their business in accordance with sharia principles that have good liquidity, large market capitalization, and are supported by good company fundamentals.

The limited number of sharia-themed stock indices is also one of the reasons for adding new sharia index options. Currently there are only 3 sharia indices, namely the Indonesian Sharia Stock Index (ISSI), the Jakarta Islamic Index 70 (JII70), and the Jakarta Islamic Index (JII).

According to the IDX, the sharia capital market in the last decade has recorded encouraging growth. The number of sharia stocks increased rapidly by 84 percent, higher than the increase in the total number of listed stocks of 65 percent.

An increase also occurred in the average daily transaction value of 8.16 percent per year, from Rp2.41 trillion per day in 2011 to Rp8.54 trillion per day in March 2021.

On the other hand, IDX also noted that the shares of BUMN and their affiliates are the movers of the Indonesia Capital Market. A total of 34 BUMN Listed Companies and their affiliates have a market capitalization portion of 24 percent of the total IDX market capitalization.

In addition, in 2020 the transaction value of BUMN stocks also had a 37 percent share of the total transaction value on the IDX.

IDX and MES hope that the launch of this index can be an indicator of the role of the government in the development of the sharia economy and can accommodate the interest of Indonesia Capital Market investors to invest in sharia stocks and SOEs. In addition, the IDX-MES BUMN 17 Index can also be a new benchmark for investors to invest in sharia stocks.

IDX Composite Index
(The Jakarta Composite Index decreased 51 points or 0.85% since the beginning of 2021)

IDX-MES BUMN 17 Index constituents are selected from sharia stocks that are included in ISSI and are stocks of BUMN Listed Companies and their affiliates. Furthermore, the determination of 17 constituent stocks for the IDX-MES BUMN 17 Index was selected based on the best transaction liquidity in the Regular Market, the largest market capitalization, and also considering financial performance, as well as a good level of compliance.

The IDX-MES BUMN 17 Index calculation uses the Capped Free Float Adjusted Market Capitalization Weighted method by applying a maximum share weight limit of 20 percent which is adjusted at the time of the evaluation. This index has been calculated since its base day on December 30, 2015 with an initial value of 100.

Periodic evaluation of the BUMN 17 IDX-MES Index consists of Major Evaluations and Minor Evaluations. The Major Evaluation, which aims at re-election and weighting of the index constituents, will take place at the end of May and November. Meanwhile, the Minor Evaluation, which aims to update the free float factor and re-limit the weight of shares, will be carried out at the end of February and August. The results of the index evaluation will be effective on the first Exchange Day of the following month.

In the future, the IDX-MES BUMN 17 Index can be used as a reference for the creation of sharia index-based investment products, such as sharua index funds and Exchange Traded Funds (ETF) on sharua indices, so that sharia investors can more easily invest in sharia BUMN stocks. selected. The issuance of this index is expected to contribute to the development of the sharia capital market in Indonesia, IDX said.