- The Jakarta Composite Index started 2025 below its reference level, bottomed slightly below 6,000 in March–mid April 2025, then recovered into the 6,600 – 7,000 range before consolidating mid July 2025. A decisive breakout occurred in late July 2025, followed by an orderly uptrend through August–November 2025 with the index spending most of the period around 8,000, and it ground to fresh highs in the mid–upper 8,000 range by December 2025. Market leadership was increasingly retail-driven (58% of average daily trading value in October 2025), with activity concentrated in low free-float and conglomerate-linked names, an important caveat for interpreting headline index strength.
- Cross-country evidence highlights wide dispersion: developed markets exhibit very high free float and positive (typically moderate) annual returns, whereas emerging markets show much more heterogeneity in both ownership dispersion and performance. Within the selected emerging-market peers, Indonesia is characterised as the lowest-free-float market in 2025 (free float 27.20%) and is paired with a decent annual return (~22%). Importantly, low float is not mechanically translated into “high return”: markets with lower float can also underperform materially (e.g., Thailand is described as having relatively low float and negative returns), reinforcing that float is a market-structure amplifier rather than a standalone return engine.
- In the Indonesia cross-section for 2025, the float–return relationship “basically disappears”: the fitted line in the scatterplot is almost flat, implying free float is not a systematic predictor of stock-level price changes on average. Instead, the distributional feature dominates. Most stocks cluster around roughly ~100–250% price change across a wide float range, while the most extreme winners (including an outlier near ~950%) are concentrated in low-to-mid float segments. Economically, the paper’s interpretation is that free float still matters non-linearly by amplifying the probability of extreme moves (thin tradable supply magnifies demand shocks), but it does not price the cross-section in a stable linear way.
Toward Stronger Financial Industry in Indonesia