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OJK relaxes buyback rules as Indonesian stocks nosedive more than 6%
The stock index has fallen more than 22 percent from its recent record high in February 2018.
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A stock ticker displays prices on the Indonesia Stock Exchange (IDX) in Jakarta, Indonesia, on April 18, 2019. (Bloomberg/Dimas Ardian)
T
he Financial Services Authority (OJK) has allowed listed companies to buy back their shares without a prior shareholders meeting in an effort to ease market volatility.
Companies are allowed to buy back stocks up to 20 percent of their paid-up capital.
“This is as an effort to stimulate the economy and reduce the impact of the significantly fluctuating market,” the OJK said in a statement issued after Monday’s trading session closed deep in the red.
The Jakarta Composite Index (JCI) plunged 6.58 percent and closed the day at 5,136.81 points, the lowest level since December 2016, amid heightened COVID-19 fears and a sharp drop in oil prices following a disagreement between oil giants Saudi Arabia and Russia. It has lost 18.46 percent of its value year-to-date with market capitalization dropping to Rp 5.94 quadrillion (US$412.43 billion) as of Monday from Rp 7.26 quadrillion at the end of last year.
Read also: Oil price slump a double-edged sword for Indonesia, Sri Mulyani says
The index has dropped more than 22 percent from its record high in February 2018, Bloomberg data show, indicating that the exchange is headed into a bear market. A bear market is defined as a 20 percent drop in price from a recent high.
Foreign investors dumped Rp 3.89 trillion worth of stocks and bought Rp 4.11 trillion, resulting in a slight net buy of about Rp 218 billion. The rupiah depreciated more than 1 percent on Monday to Rp 14,392 per US dollar, the weakest since May of last year.
