PT Barito Renewables Energy has experienced a dramatic drop in its stock value, plummeting by 36% in just two days after FTSE Russell announced the company’s exclusion from its indices. On September 22, 2024, shares of the Indonesian power producer initially fell by the maximum daily limit, marking a significant downturn for what was previously considered one of the world’s most volatile stocks.
According to reports, the stock’s decline was triggered by FTSE Russell’s decision to remove Barito from its gauges, which was initially scheduled for inclusion. The move was attributed to concerns regarding “high shareholder concentration” within the company. Following this announcement, the shares fell by an additional 20%, compounding losses that had already reached a staggering 36% since Thursday.
In a statement, Barito clarified that shareholder stakes had not significantly changed since its initial public offering (IPO) in October 2023. At that time, the company disclosed detailed shareholding information, showing that its four main stakeholders collectively controlled approximately 96% of the firm as of September 19, 2024.
FTSE Russell had intended to add Barito to its Global All Cap Index series, but the company is now set to be removed from the index, with the deletion taking effect on Tuesday. Barito’s shares had skyrocketed over 1,400% since their IPO, peaking earlier this month, but the stock has since come under scrutiny due to its rollercoaster performance, which included being placed on a watchlist for stocks deemed volatile or problematic.
As of September 19, just 11.7% of Barito’s shares met the free float requirements set by the Indonesia Stock Exchange, raising questions about its compliance with regulatory standards. The company has pledged to continue monitoring its adherence to these free float regulations moving forward.
For investors and market analysts, this rapid decline serves as a cautionary tale about the inherent risks associated with high volatility stocks, particularly in a market landscape where shareholder dynamics can swiftly shift a company’s standing. As the situation evolves, Barito Renewables Energy will need to navigate these challenges carefully to restore investor confidence and stabilize its market position.