by: Agustinus Beo da Costa
Throughout 2026, growing speculation over the potential removal of PT Barito Renewables Energy Tbk (BREN) from the Morgan Stanley Capital International (MSCI) Global Standard Index weighed on the company’s shares. The uncertainty prompted selling pressure from global institutional investors and weakened market sentiment toward the Barito Group-backed renewable energy firm.
In its May 2026 index rebalancing announcement, MSCI confirmed that BREN was among six Indonesian stocks removed from the MSCI Global Standard Index, with the changes taking effect after the close of trading on 29 May 2026.
According to trading data at the close of trading on Friday, 22 May 2026, BREN shares fell by 4.67 per cent to Rp2,450 per share. Over the past month, the share price has fallen by 53.99 per cent. Since the start of the year, the decline has reached 74.74 per cent from a level of Rp9,675 at the beginning of January 2026.
According to Rudiyanto, Director of Panin Asset Management, the pressure on the shares of the company owned by the Prayogo Pangestu conglomerate was primarily triggered by the stock’s removal from the MSCI index, which has long served as a benchmark for various global mutual funds and Exchange Traded Funds (ETFs).
“If MSCI removes a share from its index and there are mutual funds or ETFs that use MSCI as a benchmark, that share will usually be removed from their portfolios as well. This removal process is known as rebalancing. When rebalancing takes place, there is usually selling pressure on that share,” he told tanahair.net on Friday, 22 May 2026.
According to Rudiyanto, one of the main factors behind BREN’s removal from the index is the high concentration of shareholding. This situation limits the number of shares available to the public, thereby affecting trading liquidity.
“For example, suppose there are 100 shares. Usually, these are divided between the controlling shareholders and the public. If there is a high concentration of shareholding, it is possible that more than 95 per cent of the shares are held by just a few parties,” he said.
According to information disclosed by the Indonesia Stock Exchange as at 11 May 2026, 64.6 per cent of BREN shares are held by PT Barito Pacific Tbk. and 22.6 per cent by HSBC Singapore Branch. This ownership structure results in a relatively small proportion of shares held by the public.
In addition to the MSCI factor, a number of analysts believe that the decline in BREN’s share price has also been influenced by a valuation correction following a sharp rise since its initial public offering (IPO). Reza Priyambada, Director of Reliance Sekuritas Indonesia, said that the fall in BREN’s share price did not occur suddenly, but was part of the market’s adjustment to the share’s valuation and liquidity.
“This decline is not solely due to MSCI, but also because share prices had already risen too sharply since the IPO,” he said.
BREN shares briefly reached an all-time high of Rp10,450 per share on 15 May 2025. Yet at the time of its IPO in October 2023, the company’s share price was set at Rp780 per share. This means that BREN shares surged by more than 1,100 per cent in less than two years.
According to Reza, the euphoria surrounding the shares of major conglomerates was one of the factors driving the rise in BREN’s share price during that period. However, when market sentiment shifted due to the MSCI issue and liquidity concerns, selling pressure also increased, particularly from retail investors.
Strong fundamentals
Nevertheless, the fall in the share price is not yet fully reflective of the company’s underlying business fundamentals. Kiswoyo Adhie Joe, Co-Founder of AP Trading Insight Singapore, believes that BREN’s business operations continue to show fairly strong growth, particularly in the geothermal sector.
“They are developing geothermal projects; capacity is also continuing to grow. There shouldn’t be any problems. Net profit is up, and revenue is up too,” he said.
According to its first-quarter 2026 financial report, BREN recorded revenue of USD 165 million, an increase of 9.8 per cent compared with the same period the previous year. This increase was driven by stable geothermal power generation and contributions from wind power plants.
Meanwhile, the company’s net profit rose by 24 per cent to USD 53 million in the first quarter of 2026. The increase in profit was primarily driven by a reduction in financing costs.
In terms of expansion, the Wayang Windu retrofit project was successfully completed in the first quarter of 2026, thereby increasing the company’s total geothermal capacity to 926 megawatts (MW). The company is also continuing work on a number of other major projects, such as Salak Unit 7, Wayang Windu Unit 3, and the retrofit of Darajat Unit 3. All these projects are targeted to increase the company’s geothermal capacity to over 1,000 MW by the end of 2026.
Reza Priyambada believes that BREN’s prospects in the renewable energy sector remain fairly positive in the long term, given the growing global demand for green energy.
According to him, the implementation of Environmental, Social and Governance (ESG) principles in various countries will continue to drive the use of renewable energy, even though the transition away from fossil fuels will take time.
“Global policy is indeed moving towards renewable energy. But the transition cannot happen overnight. It all requires a gradual process,” he said.
Although the company’s fundamentals continue to improve, analysts believe that BREN’s challenges are not yet fully resolved. In addition to issues regarding liquidity and free float, the market is also waiting to see whether the company’s share valuation has returned to a level considered more reasonable.
In the short term, pressure on BREN shares is expected to continue due to the MSCI rebalancing process and negative market sentiment. However, in the long term, growth in the geothermal business and the expansion of renewable energy are expected to remain key drivers, provided the company can maintain its operational performance and improve its public ownership structure.
Banner photo: Image generated by OpenAI’s DALL·E via ChatGPT (2024)
