Will Indonesia Let Stock Prices Speak?

GoTo Gojek Tokopedia (GOTO) has traded at Rp50, the exchange’s minimum share price, since 5 May. Four and a half months at the floor, and the quote reads less like a price than a waiting room.

On Monday 28 September two things are expected to happen to those shares simultaneously. The Rp50 minimum disappears, so its new price floor becomes Rp1. On the same day, IDX intends to publish its first list of stocks eligible for the resumption of short selling, following the March 2020 ban. GOTO sits in the LQ45, the exchange’s index of 45 large, liquid stocks, and IDX kept it there in August despite MSCI ejecting it from its main index. On paper, at least, that should make GOTO eligible for a list only open to LQ45 members.

IDX has indicated that its first list will carry only three to five of the most liquid LQ45 names, so whether GOTO makes the cut will only be known on Monday. Either way, the largest technology company on the exchange might provide a rapid and graphic example of how the new rules will hit. Perhaps in response to the recent flurry of concern expressed by index providers, the exchange is stepping back from managing prices at both ends of the market, on the same day: 28 September.

IDX lifted the downside limit once before. It lasted nineteen months.

The third, less visible, change is the unwinding of the downside limit. The same decision removing the Rp50 floor will also end the asymmetric auto-rejection limit, or the limit on how far a stock may fall in a day, which IDX previously restricted to 15% in the course of the April 2025 sell-off. Starting 1 January 2027, daily trading limits will become symmetric again: 35% for stocks priced Rp11–200, 25% up to Rp5,000 and 20% above that.

IDX has already done this once. When the COVID relaxation ended in 2023, the old limits were restored in stages. The lower limit was throttled to 7% for two months, then 15%, with symmetric limits returning only on 4 September 2023.

Then the April 2025 sell-off reimposed the 15% limit. The current unwind is expected to follow the same two-step path.

Taken together, these three changes share more than a calendar roll-out. IDX’s short-selling announcement and its revised short-selling restrictions both cite the same OJK letter, S-113/D.04/2026 of 9 September, whose title covers auto-rejection limits, trading halts and short selling collectively. Both the new floor and the limit reset sit in one IDX decision. Brokers may short for their own accounts starting from 4 January 2027, the first Monday after the symmetric limits kick in. No official statement calls this a package, so we should treat the link as a hypothesis. The calendar is less shy.

The timing supports it, though. In January 2026, MSCI froze index changes for Indonesia over free float and transparency concerns. In June, its market-classification review was delayed to November accompanied by a warning of a possible downgrade to Frontier status. A regulator confronting that review has ample reason to demonstrate that Indonesian share prices reflect the market rather than the rulebook.

Short selling returns as a fenced, retail-first LQ45 pilot

The restart comes inside fences that make its first phase a pilot. IDX’s own decree describes it as an “extension of the period” of its restrictions, which is a modest way to announce a liberalisation.

For the rest of 2026, only domestic individual investors are eligible for broker short financing. The foreign institutions whose ability to hedge might matter most to index providers must wait until at least January. The first people allowed to borrow shares to bet against Indonesian blue chips are Indonesian retail investors: the group the Rp50 floor and the 15% limit were partly built to protect. The short positions will be effectively invisible as well: POJK 6/2024 requires a monthly eligibility list and aggregate transaction data, but creates no disclosure regime for short positions.

The academic research favours opening the market nevertheless. Across 30 countries in 2008–09, bans on covered short sales typically widened bid-ask spreads by about two percentage points, along with delaying price discovery. With the possible exception of US financial stocks, these failed to support prices.

Indonesia’s closer precedents are pilots built around a designated list, as this one is, and they show one effect the crisis bans did not. When Hong Kong added stocks to its shortable list, they fell about 4% over the following month. In China’s 2010 pilot, the fall was under 1% in the first week. Where shorting had never been allowed, the restrictions had held prices slightly high. The first names on the October list might expect a repricing somewhere within that range.

Following the change, China’s pilot stocks became more efficiently priced and less volatile, while Hong Kong’s became more volatile. On volatility, the precedents cancel out.

GOTO shows how the two reforms can meet. A stock at the floor can qualify for the short list, but the Watchlist Board, where IDX places distressed or illiquid stocks for trading by call auction, screens for a six-month average price below Rp51. It reviews that test each May and November. GOTO’s average will be below Rp51 by November, and a move to the Watchlist Board lets the exchange drop a stock from the short list. Unless IDX changes the watchlist criteria alongside the floor, GOTO could be shortable in October and off the list again by December.

Without the floor, the market price will show

A stock that has been stuck at Rp50 could, until now, sell below that level only in the negotiated market, where private trades are reported off the order book. Much of the Watchlist Board’s machinery is also built around the old floor. Its entry test is the Rp51 average, and a stock cannot leave the board until it trades at Rp50 or more. Starting Monday, the screen will finally reflect the price investors actually pay for these companies.

For GOTO, it will be the first new price since May.

Four and a half months at the floor, and the quote reads less like a price than a waiting room.

What happens then depends on who is doing the trading. In Shanghai in 2002, prices accelerated toward the ±10% limit as it came within reach. Near the lower limit, spreads widened and volume thinned, which the research attributes to panic selling by individual investors, and prices reversed following a lower-limit hit. Spain’s volatility-auction design showed no such pull toward the limit. A theoretical model of a wider limit finds it can raise or lower volatility, depending on how volatile a stock already is.

January’s wider limits will likely produce larger one-day falls. Some of these will reveal market perceptions that the 15% limit had kept off the screen; some will be simple panic that reverses within days.

At the bottom of the share price range, the numbers can do real damage. Below Rp200, the minimum price step is Rp1, while in the Rp1–10 band the daily limit is Rp1 in either direction. A Rp2 stock can lose half its value in one step, and a Rp1 stock can double.

The same arithmetic sets the cost of trading. Indonesian broker commissions, exchange levies and the sales tax are all charged as a percentage of value, so they cost the same share of a Rp2 trade as of a Rp10,000 one. The price step does not scale. A buyer and a seller of a Rp2 stock cannot quote closer than Rp1 apart, a gap of 50% of the price; above Rp5,000 the step is Rp25, or at most 0.5%. Lower nominal prices therefore mean wider spreads as a share of the price, which is the trading cost that matters here.

The buyers of cheap, volatile, lottery-like stocks are mostly individuals, and research suggests they bear the cost. In US brokerage data, the investors who held most of these types of stocks underperformed those who held the least by about 13 percentage points a year after adjusting for risk. The stocks themselves did not systematically underperform; the losses came, instead, from how and when those investors traded them. The lottery, in other words, pays out. The players don’t.

Stocks priced Rp50–200 take the largest new downside

The short list addresses the top end of the market, while the old floor held up the bottom. The companies that feel the largest change are likely to sit in between. Since April 2025, a stock priced Rp50–200 has been able to fall at most 15% in a day, and never below Rp50. From 28 September the only floor beneath it is Rp1, and from January it can fall as much as 35% in a day. These companies are too small to be shorted, and until now the 15% limit and the Rp50 floor have been their circuit breakers.

The evidence from Shanghai suggests what a 35% limit-down day could look like for them: thin volume, wide spreads, and a price that often recovers once the selling exhausts itself. The preparation is modest and belongs before January. Decide who answers the phone on such a day and agree the holding statement in advance. The worst time to draft it is 9:05 on the morning the price is already down 20%. Check whether anything undisclosed could explain a fall of that size; if something could, POJK 45/2024 already requires it to be published before the next session opens.

Sub-Rp50 boards: a reverse split buys time, not value

One obvious response to a share price heading for Rp1 is to consolidate shares. The evidence on whether this works is divided, and the division shows when consolidation helps.

On average, the long-run record is poor. Across 1,612 US reverse splits between 1962 and 2001, buy-and-hold abnormal returns, meaning returns beyond what comparable stocks earned, were −8.5% after one year and −29.8% after three. Losses were concentrated in stocks still priced at $5 or less after the split, with these losing 67% over three years; stocks priced higher showed no significant underperformance.

Across 24 developed markets, reverse-split stocks underperformed by nearly 1% a month for 18 months after adjusting for risk. The US authors attribute this persistence to these stocks being hard to short. A consolidated sub-Rp50 company in Indonesia will be unshortable for years under the LQ45 rule, so nothing will correct its price if the market overprices it after the split.

The case for consolidation largely rests on cost and on newer data. A higher share price lowers trading costs, and after US reverse splits of 1-for-20 or larger, relative spreads narrowed by about 21 percentage points. A study of US splits in 2002–06 found no negative abnormal returns at all. In the international sample, the smallest companies, which is the profile of most sub-Rp50 issuers, also did not underperform after reverse splits.

The same 2002–06 study explains the division. Among firms priced below $3, more than a quarter were delisted within a year of the reverse split, while firms that repeated reverse splits had already fallen by two-thirds in the year before. Consolidation in a company whose business is recovering costs little and can lower trading friction. Consolidation used in place of recovery is followed by more decline.

Two Indonesian rules make the decision harder to undo. A company cannot split or reverse-split again within 12 months, so a board that gets the ratio wrong has twelve months to admire it. A deep consolidation in a company with few freely traded shares can also push its public share count or holder count toward the minimums for staying listed, and those free-float minimums are rising toward 15%.

For a board facing this, the order of work matters.

Minority shareholders face a separate risk. In a mandatory tender offer, Indonesian takeover rules set the minimum price as the higher of the acquirer’s own purchase price and the average of the daily high prices over the previous 90 days. Three months of trading at Rp1–10 drags that 90-day benchmark down with it. A controlling shareholder or new acquirer that bought its stake cheaply could then buy out minorities at a price anchored to Rp1-era trading. Independent commissioners of affected companies should expect minority investors to ask how the board would respond to such an offer.

Large caps on the list: answer the short thesis, track the trades, disclose once

Companies on the October list face something new in Indonesia: a counterparty who profits if the price falls. The evidence on how to respond is consistent.

Don’t fight them. Across 266 US companies between 1977 and 2002, those that publicly battled short sellers underperformed the market by 2.34% a month over the following year; weighted by market value the figure was 1.31%, smaller but still negative. Short sellers are frequently well informed. Abnormal short interest builds over the 19 months before a financial misrepresentation is revealed, and firms with more short interest are caught about eight months sooner.

When activists publish short reports, most of the selling comes from investors who already own the stock. Those holders are the audience for any rebuttal, and they respond to answers on the report’s facts.

Knowing a short seller is present will take work, because nothing in the rules requires short positions to be disclosed. Rule II-H requires short-sale orders to be flagged, and POJK 6/2024 provides aggregate trading data. Combined with the company’s own analysis of its shareholder register, that is enough to see a position building. IROs should ask IDX and KSEI, the central depository, now what they will publish, and in what form.

The last defence is the one issuers already control. POJK 45/2024 requires material facts to be disclosed before the next session opens. With short sellers in the market, releasing bad news in instalments hands each one a trade. Put it out in one release and answer the thesis on its merits.

January will show whether IDX’s price supports stay down

Four things will demonstrate IDX’s resolve in implementing lasting reform. Three tests are procedural: whether the list reaches beyond LQ45 after June 2027, whether the local-individuals-only rule lapses at year-end, and whether the 8% halt trigger, another 2025 emergency measure, is reset under S-113.

The fourth is the one that matters: whether symmetric limits actually arrive on 1 January.

The downside limit has now been unwound twice in three years, and the first time it lasted nineteen months. If the next sell-off brings the 15% limit back, Indonesia will have shown investors that its supports are temporary in both directions. Whichever way January goes, plan for a share price the rulebook no longer holds up.