A big Indonesian businessman has suffered a major shock. Global index provider MSCI has raised concerns about the valuations and shareholder structures of some Indonesian companies. Following the release of this report, there was a massive selloff in the Indonesian stock market. Due to this, the net worth of the country’s richest people declined by about $22 billion in a single day.
However, the biggest loss was suffered by Indonesia’s richest man, Prajogo Pangestu. Shares and total market capitalization of his companies operating in the energy and mining sectors fell by about $9 billion, or about 8.27 trillion Indonesian rupiah.
Big blow to billionaire
According to the Bloomberg Billionaires Index, Prajogo Pangestu’s net worth has now dropped to $31 billion. His wealth has declined by nearly $15 billion this year alone. Prajogo owns a 71 percent stake in its energy company, Barito Pacific, and an 84 percent stake in Petrindo Jaya Kresi, a company involved in coal and gold mining. Shares of both companies fell about 12 percent in a single day. The billionaire’s family office issued a statement saying they are reviewing the MSCI report and comments and will be in constant contact with all relevant parties.
Why was there such a huge selloff?
The sharp market reaction came after an MSCI report that raised questions over Indonesia’s shareholder reporting rules. According to the report, investors believe that the existing rules do not provide clarity about the ownership structure of companies, increasing the risk of unfair trading practices.
MSCI also pointed to long-standing concerns about companies where control of shares is concentrated in the hands of a few individuals or a single person. Such highly concentrated ownership has been the basis for the creation of some of the largest individual wealths in Indonesia and other parts of Asia.