BREN shares hit record lows and face sharp declines after being removed from the FTSE index due to non-compliance with free float requirements.
The delisting wipes over Rp500 trillion from BREN's market cap, as the company disputes FTSE’s claims and demands an official retraction.
By Falito Villienuve Tandra, Salma Farah Faiza, and Iman Satyo Adi
September 27, 2024 at 16:30 GMT+7
PT Barito Renewables Energy Tbk (BREN) saw a dramatic market response following its removal from the FTSE index, causing a sharp decline in its stock price. Upon market opening, BREN shares immediately fell to the Floor Price Rejection (ARB) limit, plunging 19.95% to Rp8,825 per share.
This significant drop sharply contrasts with the stock’s previous strong performance, where it had surged above Rp12,000 per share earlier in the month. The delisting marked BREN’s lowest level in over a month, dating back to August 15, 2024, underscoring the severity of the impact.
Analysts attribute this sharp decline to FTSE Russell's announcement that BREN was removed due to non-compliance with free float requirements, as the majority of its shares were controlled by just four main shareholders. The delisting is set to take effect on September 25, 2024, and signals ongoing challenges for the company’s stock performance and market stability.
Sharp stock decline illustration | Source: Fintech Futures
BREN’s removal from the FTSE was primarily due to its failure to meet the 5% minimum free float requirement, with 97% of its shares controlled by just four major shareholders. This lack of liquidity has been a persistent issue for BREN, as similar concerns were raised by the FTSE earlier in the year.
The concentration of ownership has created challenges in maintaining sufficient market activity, ultimately leading to its delisting. Furthermore, BREN’s market capitalization has plunged by over Rp500 trillion, displacing it from its position as one of the most valuable stocks on the Indonesian exchange.
The combination of ownership concentration and this sharp market cap decline has raised significant concerns among investors, casting doubts on the company’s future stock performance and its ability to regain market confidence.
Prajogo Pangestu | Source: Dimas Ardian/Bloomberg
Through its corporate secretary, BREN's management disputed FTSE’s justification for removing the company from the FTSE Global All Cap Index. They emphasized compliance with OJK and BEI regulations, noting that BREN met the required free float percentages during its IPO and other regulatory obligations.
Despite this, FTSE stated that the removal was due to concerns over the liquidity and marketability of the shares, given recent trading patterns. BREN is now urging FTSE to retract the statement and issue a correction. The delisting has had a negative impact on their market capitalization and public perception.
Following the announcement, BREN’s shares dropped significantly, triggering a Floor Price Rejection (ARB) for two consecutive days and resulting in substantial losses to the company’s value.
Source: Bloomberg
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