IDX Implements Quarterly Rebalancing for LQ45 Index Constituents

LQ45 STOCK INDEX - JAKARTA. The Indonesia Stock Exchange (IDX) has announced plans to increase the frequency of rebalancing for member stocks of its LQ45 index. Going forward, IDX will conduct rebalancing of LQ45 stocks every three months.

Kautsar Primadi Nurahmad, Secretary of the Indonesia Stock Exchange Company, revealed that significant evaluations will now occur four times annually, specifically in January, April, July, and October, with effective adjustments in February, May, August, and November.

Previously, IDX conducted major evaluations semi-annually, in January and July, with corresponding adjustments in February and August, alongside minor evaluations.

"Therefore, come April 2024, we will conduct a significant evaluation of these indices, replacing the minor evaluations as per previous protocols," Kautsar elucidated over the weekend.

IDX Development Director Jeffrey Hendrik explained the utilization of Morgan Stanley Capital International (MSCI) as a benchmark. MSCI, being one of the world's largest index providers, guides IDX's methodologies.

Part of IDX's strategy involves conducting major evaluations every quarter to ensure that stocks within the LQ45 index consistently meet criteria.

"We consider MSCI as a pivotal reference due to its stature as one of the largest index providers globally," Jeffrey remarked.