JAKARTA (TheInsiderStories) – Indonesia Stock Exchange (IDX) officially releases new reference index IDX80 today (01/02). IDX80 is an index of the price of 80 shares of listed companies that have high liquidity and large market capitalization.
The existence of this index is expected to be an alternative reference for investors and investment managers in making investment in Indonesia. The IDX80 selection process begins by choosing 150 shares from all listed companies based on the total value of transactions on the regular market over the past 12 months.
From the 150 shares, 80 constituent stocks were selected taking into account liquidity factors of the IDX80. The bourse regulator also pays attention on the fundamental factors, which include financial performance, compliance, and others.
The IDX80 use the capped free float adjusted market capitalization weighing method by imposing a capping on a stock in the highest index of 9 percent at the evaluation time. The agency sets the base date for the IDX80 Index on Jan. 30, 2012 with a basic value of 100.
The IDX will conduct two types of periodic evaluations of the IDX80, which include evaluations of constituents and readjustments to the weight of shares in the index as a major review. Then, the minor evaluation includes a readjustment of the weight of shares in the index.
Major evaluation of the IDX80 Index will be conducted at the end of January and will then be effective every first Exchange day in February. Minor evaluations for the index are carried out at the end of July and thereafter will be effective every first Exchange day in August.
At the same time, the IDX began the initial stages of implementing the free float on the weight of the LQ45 and IDX30 Index calculations. At this stage, free float does not count as a weight of 30 percent but free float shares plus 70 percent of the total shares unfree float shares.
In a statement, the IDX said will gradually reduce the number of unfree float shares from the weight of the LQ45 and IDX30 Index calculations and only use the number of free float shares as the weight of the calculation on August 1, 2019. On each weight adjustment, the IDX will announce the five Exchange days before effective.
In the future, it is expected that the IDX80 index can be used as a reference basis for capital market products, such as mutual funds, ETFs, and other derivative products.
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