ADJUSTMENTS to the way the IDX Composite Index is calculated are set to benefit a number of counters, among them Indonesian telco Telkom as well as conglomerate and Jardine unit Astra International.

Citi Research analyst Ferry Wong said in a report issued Tuesday that the new method of calculation for the IDX Composite - known in Indonesia as the Indeks Harga Saham Gabungan and widely used as the Indonesia Stock Exchange's benchmark - will reduce the weight of companies with low free float while increasing that of the higher free-float companies such as banks and telcos.

The new weighting method will use free float-adjusted market capitalisation and put a maximum of 9 per cent weighting for each stock, as opposed to the previous method of using total market capitalisation. It will be implemented in stages from Oct 1, 2021 up until April 1, 2022.

Other beneficiaries listed by Mr Wong are Bank Mandiri, Bank Rakyat Indonesia, miner Merdeka Copper Gold and poultry processor Charoen Pokphand Indonesia. Citi has "buy" recommendations on all those stocks with the exception of Charoen Pokphand Indonesia, which is rated "neutral".

Telkom's weight in the index is expected to rise the most, at 3.1 per cent. Astra's weight should increase by 1.7 per cent, Bank Mandiri by 1.5 per cent, and Bank Rakyat Indonesia by 1.4 per cent. Merdeka Copper Gold and Charoen Pokphand Indonesia will see smaller increases of 0.7 per cent and 0.6 per cent, respectively.

Meanwhile, Bank Central Asia will be the hardest hit by the change as its weighting will be capped at a lower 9 per cent from the current 11.4 per cent. Citi remains "neutral" on the stock.

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The research house is expecting the internet giant GoTo, which is due to list on the IDX Composite Index in H2 this year along with e-commerce company Bukalapak, to have a maximum weighting of 9 per cent on the index.

Assuming a 100 per cent implementation of the capped adjusted free-float market capitalisation, Mr Wong says the dilution of existing corporates on the index will be about 10 per cent as a result of the two new tech listings.

"The valuation mentioned on Dealstreet Asia is about US$35-40 billion for GoTo and US$4-5 billion for Bukalapak. This should place GoTo as the second-largest market cap stock in Indonesia, just behind Bank Central Asia, while Bukalapak would be within the top 20 market caps," he said.

Mr Wong expects more tech firms and unicorns such as Traveloka, Ticket.com and OVO to be listed over the medium term.