The Composite Stock Price Index (IHSG) is projected to have the opportunity to strengthen again after pressure from the Morgan Stanley Capital International (MSCI) rebalancing begins to ease in early June 2026.

Capital market practitioner Hans Kwee believes that the portfolio adjustment process among global investors is driven more by technical factors rather than changes in company fundamentals.

Hans stated that volatility in the Indonesian stock market could increase during trading on Friday (29/5/2026), as passive fund managers conduct portfolio rebalancing ahead of the MSCI index adjustment taking effect on June 1, 2026.

According to him, most institutional investors have likely already adjusted their portfolios since the MSCI announcement on May 12, 2026, making selling pressure in the market relatively more controlled.

“On Friday, May 29, 2026, the Indonesian stock market may experience high volatility because passive fund managers are rebalancing their portfolios following the MSCI announcement,” Hans Kwee told Kompas.com on Thursday (28/6/2026).

He assessed that the removal of several stocks from the MSCI Global Standard Index and MSCI Small Cap Index was mainly related to weighting methodology and stock liquidity factors rather than deteriorating corporate fundamentals.

Hans said several issuers removed from the MSCI index still possess strong fundamentals, positive business prospects, and attractive valuations amid current market pressure.

“The deletion of several issuers from the MSCI index is more technical in nature, related to weighting methodology and liquidity. It does not reflect any deterioration or change in company fundamentals,” he explained.

He added that post-MSCI rebalancing conditions could potentially mark the bottom of the IHSG correction before the index resumes its upward movement in line with future corporate fundamentals.

In addition, Hans believes that reforms implemented by capital market authorities in recent years have also strengthened investor confidence in Indonesia’s stock market.

“The post-MSCI rebalancing period could become the bottom of the IHSG decline and open opportunities for the market to rebound following corporate fundamentals in the future,” Hans said.

For information, the results of the May 2026 MSCI Index Review and rebalancing announced on May 12 attracted significant attention from market participants because of their potential to trigger short-term volatility in the domestic stock market.

The index adjustments, which will become effective on June 1, 2026, are driving changes in stock weightings and creating the possibility of capital outflows from issuers whose portions in the MSCI global index have been reduced.

MSCI rebalancing itself is a routine process of adjusting stock composition and weightings within the Morgan Stanley Capital International (MSCI) index, conducted every February, May, August, and November.

During the process, MSCI evaluates several factors, including market capitalization, trading liquidity, and the level of public ownership or free float of an issuer.

In the latest review, Indonesia’s market once again came under scrutiny after MSCI maintained its policy of freezing the inclusion of new stocks in the MSCI Global Standard Index category.

The policy is linked to MSCI’s concerns regarding free float transparency, high ownership concentration, and the investability aspect of Indonesia’s capital market.

This condition has encouraged global investors, especially passive fund managers, to gradually adjust their portfolios ahead of the implementation date in early June.

As a result, several stocks experiencing reduced weightings or removal from the index may face selling pressure that could also influence the movement of the IHSG.

Nevertheless, the Financial Services Authority (OJK) has urged investors to remain calm and view the adjustment process as a normal part of market dynamics.

OJK considers MSCI’s evaluations as an opportunity to improve governance standards and enhance the quality of Indonesia’s capital market over the long term.