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Jakarta Post

SOEs set aside up to Rp 8 trillion to buy back shares amid falling prices

  • News Desk

    The Jakarta Post

Jakarta   /   Wed, March 11, 2020   /   05:30 pm
SOEs set aside up to Rp 8 trillion to buy back shares amid falling prices Trade Minister Agus Suparmanto (center) presses the button to officially close 2019's last trading day on Dec. 30, (JP/Dhoni Setiawan)

A dozen state-owned enterprises listed on the local stock exchange will buy back their shares to prop up prices which have dropped sharply in the past few days amid fears the new coronavirus outbreak would further worsen the country’s economic outlook.

Arya Sinulingga, an aide to State-Owned Enterprises (SOEs) Minister Erick Thohir, said that the 12 state companies had allocated between Rp 7 trillion (US$489 million) and Rp 8 trillion to buy their shares from the public.

The twelve companies include Bank Rakyat Indonesia (BBRI), Bank Mandiri (BMRI), Bank Negara Indonesia (BBNI), Bank Tabungan Negara (BBTN), construction company Wijaya Karya (WIKA), Adhi Karya (ADHI), Pembangunan Perumahan (PTPP), Jasa Marga (JSMR), Waskita Karya (WSKT), mining company Aneka Tambang (ANTM), Bukit Asam (PTBA) and Timah (TINS), as told by Arya.

“The share buyback is needed as the prices of their shares have fallen far below their book value,” Arya told reporters on Tuesday.

The state companies had begun their share buyback program and that it was up to them to decide when the share buyback practices would be stopped, Arya said after the Financial Services Authority (OJK) issued a regulation on Monday evening to allow listed companies to buy back their shares without prior shareholders approval.

The new policy allows the listed companies to buy back up to 20 percent of their paid-up capital in a bid to push up their share prices. “This is as an effort to stimulate the economy and reduce the impact of the significantly fluctuating market,” the OJK said in a statement.

The Jakarta Composite Index (JCI), the main price indicator on the IDX), fell further by nearly 2 percent on Wednesday after losing 6.7 percent on Monday. The index lost 17 percent this year amid growing fears over the global spread of the new coronavirus.

Read also: OJK relaxes buyback rules as Indonesian stocks nosedive more than 6%

Shares of state companies listed on the local stock exchange have fallen by between 10 percent and 40 percent since the start of the trading this year.

State-owned construction firm Adhi Karya told The Jakarta Post on Wednesday that the company would buy back their shares as required by the government.

“Adhi will make a share buyback. The plan is under study,” Adhi Karya corporate secretary Parwanto Noegroho said. He added that the information disclosure related to the buyback would be announced following the OJK circular letter.

Bank Mandiri corporate secretary Rully Setiawan told the Post in a written statement that the bank had approved an approval from the SOEs Ministry to buy part of its shares which have been sold to the investing public.

“Bank Mandiri will closely monitor the market condition,” Rully said on Tuesday, adding that a study on the technical, legal and taxation aspects needed before the share buyback was conducted.

Read also: Bourse announces new trading suspension policy on brink of bear market

Meanwhile, Jasa Marga head of corporate finance Eka Setya Adrianto said in Jakarta on Tuesday that the company was still studying the option at the moment but he was reluctant to explain the details of the share buyback plan.

Coal miner Bukit Asam finance director Mega Satria said on March 3 that the company would wait for stable market conditions and OJK approval before buying back its stocks.

When asked whether PTBA would buy back its stocks this month, Mega said; “we’re not sure when. We still wait and see. We’re also not sure how much we will buyback. ”

He went to say that Bukit Asam still held 330 million treasury stocks that “we want to sell, actually, but we have to look at the market condition.”  The stocks were part of the stocks it bought from the market some time ago.

Norman Harsono contributed to the story