JAKARTA: Influenced by social media, retail investor Qolbi bought into a soaring stock on the Indonesia Stock Exchange (IDX), only to become the victim of a classic “pump and dump” scheme.
The 39-year-old employee of a Jakarta-based digital advertising firm bought the shares of a bank at the peak of an artificial rally five years ago, only to watch the stock crash and wipe out more than half its value within days.
His story highlights a systemic crisis in Indonesia: The rampant practice of “goreng saham”, or stock market manipulation. Retail investors have lost billions of dollars in the last decade due to what critics call regulatory negligence, with the stock exchange authorities long criticised for a perceived lack of investigations into fraud.
The issue of stock manipulation reached a breaking point at the end of January, when market-index provider MSCI threatened to downgrade Indonesian stocks due to severe opacity over shareholdings. The Jakarta Composite Index plunged nearly 9 per cent on Jan 28 following that announcement.
Indonesia’s rupiah currency had days earlier slid to a historic low against the US dollar due to persistent unease over the country’s fiscal imprudence and aggressive state intervention under President Prabowo Subianto.
Qolbi’s woes were tied to speculation in 2021 that Bank MNC, a Jakarta-based lender, was securing backing from Chinese tech giant ByteDance, TikTok’s parent company. The ByteDance narrative had been systematically seeded across stock trading forums, with aggressive buying fuelling Bank MNC’s stock.
Qolbi, who goes by only one name, was caught up in rumours of the bank making an imminent rights issue, which ByteDance was expected to participate in.
The rights issue went ahead, with many investors, including Qolbi, snapping up shares – but ByteDance was not among them.
“The realisation struck hard,” the father of two told The Straits Times. “The subsequent share price collapse was unforgiving.”
While market participants widely suspected certain individuals of manipulation, no official investigation ensued.
Indonesia’s 1995 Capital Market Law endows the Financial Services Authority (OJK) with the authority to investigate stock market crimes, a power independent of the police.
But repeated cases of OJK appearing to turn a blind eye have led to public criticism. Observers have also urged for greater efforts to cover loopholes that can be used to manipulate the market.
Hasan Fawzi, an OJK commissioner, told reporters on Feb 4: “We give serious attention to efforts to strengthen capital market surveillance and integrity.”
The stock market plunge and confidence crisis have led to the resignations of OJK chairman Mahendra Siregar, his deputy Mirza Adityaswara, and Indonesia Stock Exchange chief Iman Rachman.
Investors and observers cited other examples of stock cornering, including the trading of plastic pipe manufacturer Multi Makmur Lemindo and real estate company Diamond Citra Propertindo.
In both cases, an individual or a group is believed to have accumulated a massive portion of a stock’s supply to dictate its price.
In April 2025, shares of Multi Makmur surged 130 per cent within a month, while Diamond Citra surged by 2,900 per cent around mid-2025. Trading in Barito Renewables Energy, which saw a surge of more than 1,000 per cent within months in 2024, was also questioned.
Bank employee Rivki Maulana, 37, fell for such tactics. He noted that such companies attract investors by promising quick, high gains. “These companies spoil retail investors, setting aside the need for fundamental analysis. It drives investors into quasi-gambling,” he said.
Muhammad Avisena, a full-time trader based in Pekalongan, Central Java, said the targets of stock cornering are not exclusively stocks with small market capitalisation.
“Some cases involve big-cap stocks, even those included in the LQ-45 index. The bourse should raise the bar and be more selective,” he said, referring to the IDX’s index of the most liquid stocks with the highest capitalisation.
Like Mr Qolbi, both Rivki and Avisena fell victim to stock cornering, incurring losses of at least 100 million rupiah (S$7,500) each. They view the lost investment as irretrievable.
Giovanni Mofsol Muhammad, a senior partner at Dentons HPRP law firm in Jakarta, told ST that the OJK possesses a “disgorgement” instrument. “This clause would allow the watchdog to order manipulators to return illegal gains to a compensation fund for victims,” he said.
In response to the stock slump, the Indonesian government has said that short-term volatility is normal and does not alter the country’s underlying economic fundamentals. But officials view the MSCI feedback as a catalyst for structural reform.
Luhut Pandjaitan, chairman of the National Economic Council, pledged on Feb 2 to accelerate reforms to make the capital market more transparent. This includes stricter trading supervision, monitoring of unusual transactions, and enforcing rules against manipulation. The council advises Prabowo on strategic economic policy.
Among the necessary reforms, Luhut said, are increasing the free-float threshold, adopting artificial intelligence for market surveillance, and the exchange’s “demutualisation”. Demutualisation refers to eliminating the inherent conflict of interest in the exchange’s ownership structure.
The IDX is currently owned by the stock brokerages it is supposed to regulate, raising possible hesitation to punish a recalcitrant brokerage. Many stock cornerings have involved recalcitrant stock brokerages, investors and observers said.
Capital market legal counsel Erwin Kurnia Winenda hailed the plan to raise the minimum “free float” – the market authorities have pledged to increase it to 15 per cent, from the current 7.5 per cent.
“To achieve a higher free float, companies can offer more shares to the public via a rights issue, or offer them to targeted investors via a private placement mechanism,” Erwin said. This, he said, would make price manipulation much harder. – The Straits Times/ANN