LQ45 Index Portfolio Rebalancing

LQ45 Index Portfolio Rebalancing. The LQ45 index is a stock market index on the Indonesia Stock Exchange. Which consists of 45 companies that meet certain criteria. As well as include in the top 60 companies with the highest market capitalization in the last 12 months. Investment managers are preparing to rebalance their portfolio as members of the LQ45 and IDX30 index constituents change.

As is known, the Indonesia Stock Exchange (IDX) has just officially change the ranks. Of the LQ45 and IDX30 index occupants to a list that is valid from August 2020 to January 2021. The Exchange added three new issuers to the LQ45 Index list, namely Merdeka Copper Gold Tbk (MDKA IJ), Mitra Keluarga Karyasehat Tbk (MIKA IJ), and Summarecon Agung Tbk (SMRA IJ).

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In exchange, IDX eliminated Barito Pacific Tbk (BRPT IJ), Matahari Department Store Tbk (LPPF IJ), and Waskita Karya Tbk (WSKT IJ). For IDX30, IDX added Bank BTPN Syariah Tbk (BTPS IJ), XL Axiata Tbk (EXCL IJ), and Sarana Menara Nusantara Tbk (TOWR IJ). Meanwhile, three shares that came out of IDX30 calculations, namely Barito Pacific Tbk (BRPT IJ).

As well as Waskita Karya Tbk (WSKT IJ), and Pembangunan Perumahan Tbk (PTPP IJ). Mutual fund products that refer to the index, of course they will immediately make changes to the portfolio by buying shares of new index residents and releasing the shares of members who leave. Fund managers will definitely follow the changes for index mutual funds and active mutual funds that refer to the index.

LQ45 Stocks Performance

Fund managers will also immediately change their portfolios according to the list of the two most recent members of the index once the list is officially valid. However, for other active mutual funds, it is not certain to include these stocks in the portfolio of product-based stocks because they will still observe their performance.

On the other hand, even though it is included in the main reference indexes, the performance of an issuer’s shares will not necessarily show an increase. The reason, market appreciation regarding the entry of a stock into the index only lasts briefly. Meanwhile, for the LQ45 and IDX30 index projections until the end of this year.

Both will still show an upward trend in line with the movement of the Jakarta Composite Index (JCI). The reason is, the composition of the two indexes are stocks that dominate the JCI movement so that the movements will be in line. One positive catalyst is the various stimuli from central banks in various countries, including Indonesia.