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View all search resultsAnalysis: Wanted: The best candidates to tame the stock market
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Financial Services Authority (OJK) acting head Friderica Widyasari Dewi (fourth right), and another newly appointed OJK leader, Hasan Fawzi (third right), brief the press after taking on their new roles on Jan. 31, a day after previous leaders announced their resignations. Jeffrey Hendrik (second from right), meanwhile, is expected to assume ad-interim the role of Indonesia Stock Exchange (IDX) president director. (The Jakarta Post/Ni Made Tasyarani))
F
ollowing the resignation of the Financial Services Authority (OJK) chairman and deputy chairman, the government has formed a selection committee to seek the best candidates to lead the OJK and restore investor confidence after market turmoil triggered by Morgan Stanley Capital International (MSCI)’s interim freeze of its February review of Indonesian stocks. The pressing question is whether any candidate will be capable of rebuilding market trust.
The selection committee, established on Feb. 9, is chaired by Finance Minister Purbaya Yudhi Sadewa and comprises eight members, including Bank Indonesia (BI) Governor Perry Warjiyo, Deputy Finance Minister Suahasil Nazara and several senior officials and experts. The committee has set relatively lenient eligibility criteria, requiring at least 10 years of experience in the financial sector and no criminal record. Politicians are eligible provided they resign from their political parties.
Several figures were rumored to be entering the race, including House of Representatives Commission XI chairman Muhammad Misbakhun and Suahasil Nazara, though both denied their involvement. While applications remain open until March 2, Purbaya has publicly expressed dissatisfaction with the quality of the applicants, noting that many have fallen short of expectations.
The selection process unfolds at a critical juncture. The stock market has slumped after MSCI temporarily froze Indonesia’s February market classification review and warned that the country could be downgraded from emerging market to frontier market status if governance concerns persist through May 2026. Such a downgrade could trigger capital outflows of up to Rp150 trillion (US$8.88 billion), according to one estimate.
At the heart of MSCI’s concerns is weak market governance, particularly the limited disclosure of ultimate beneficial ownership (UBO) because of complex corporate structures, especially among conglomerate-linked stocks. These stocks have long been suspected of engaging in market manipulation practices, commonly known as “pump-and-dump” schemes, which propelled the Jakarta Composite Index (JCI) toward the 9,000 level within a short span.
These concerns are reflected in unusually high price-to-earnings (P/E) ratios, signaling excessive valuations and elevated risk. For instance, shares of PT Chandra Daya Investasi - linked to conglomerate Prajogo Pangestu - reached a P/E ratio of 401 times. Following MSCI’s announcement, the JCI fell sharply from nearly 9,000 in late January to 7,922 on Feb. 2.
MSCI’s warning did not emerge overnight. Discussions over governance weaknesses have been ongoing since October 2025. Earlier this year, MSCI even offered the OJK a revised free-float calculation methodology tailored to Indonesia. In response, the OJK and the self-regulatory organizations (SROs) prepared measures to strengthen equity market governance, including improving UBO transparency.
