JAKARTA (TheInsiderStories) – Indonesia’ Financial Services Authority (FSA) allowed listed companies to buyback shares up to 20 percent of their paid-up capital without need a shareholders approval, said the agency on Monday (03/09). The new policy has been taken in an effort to ease market volatility and provide the stimulus to the market.
Today, the Jakarta Composite Index (JCI) dropped 6.8 percent to 5,136.81 compared to last weekend. Beside Indonesia, other global major indices also plunged amid the “price war” in oil prices by Russia and Saudi Arabia and the coronavirus spread.
Since the beginning of 2020, Indonesian stock trading experienced significant pressure, which is indicated from the decline in the JCI by 18.46 percent until today.
“This happened in line with the slowdown and pressure of the global, regional and national economy as a result of the COVID-19 outbreak and weakening world oil prices. For this reason, we issued a policy to conduct share repurchases by the issuers,” said the agency in an official statement.
Earlier, the Indonesia Stock Exchange (IDX) revokes all short selling transaction in the stock market followed the drowned of the JCI. The regulators said, the short selling transactions ban will implemented until to the deadline to be determined later.
Based on the official data, throughout the year the index has fell 13.44 percent. According to IDX, the decline in the last week of February was the biggest contributor to the decline in the in the global major exchanges and ASEAN.
The highest decreases were experienced by the Philippines and followed by Indonesia, Vietnam, Singapore and Malaysia with weekly decreases of -7.9 percent, -7.3 percent, -5.45 percent, -5.34 percent and -3.17 percent.
It said, the investors’ anticipation of the impact of the coronavirus which is expected to expand to other countries has give an impact on the global economic and trade activities. Furthermore, IDX said has coordinated with Financial Service Agency and the government to formulate initiatives and incentives to be provided in order to anticipate the impact of the virus in the Indonesian capital market.
In the midst of negative sentiment surrounding the global financial markets, the agency urged the investors not to panic and continue to invest based on in-depth analysis.
On Friday (03/02), Bank Indonesia’ governor Perry Warjiyo, reported as of Feb. 27, total net foreign fund outflows amounted to Rp30.8 trillion (US$2.2 billion). Other sentiments that might affect the instruments were domestic data, such as manufacturing PMI which contracted 49.3 in January. In addition there is inflation data for Indonesia in February.
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