TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
New 7 percent limit-down rule slows JCI fall
The Indonesian Stock Exchange (IDX) has issued a series of measures to cope with the market rout following the crash on Monday last week
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
The IDX logo is seen in front of a giant screen that displays information of the movement of stock prices at the Indonesia Stock Exchange (IDX), Jakarta, on Friday. (JP/Seto Wardhana)
T
he new 7 percent limit-down rule introduced by the Indonesia Stock Exchange (IDX) last week has helped slow the fall in the exchange’s main price benchmark the Jakarta Composite Index (JCI), as the rout continued to hit the local market amid uncertainties surrounding the COVID-19 global pandemic.
The new regulation, issued on Thursday last week and coming into force on Friday, is part of a series of regulations rolled out by the IDX recently in an attempt to calm the market following a historic crash on Monday, during which the JCI nosedived 6.58 percent to a three-year-low, reflecting a fall across all blue-chip stocks.
On that day, mining company PT Bukit Asam sank 9.8 percent, consumer goods company PT Indofood Sukses Makmur plunged 8.27 percent, Bank Central Asia (BCA) 6.69 percent, and telecommunications firm PT Telekomunikasi Indonesia (Telkom) 6.67 percent.
This week, despite still being in the red, those shares have seen falls that have been less steep. On Wednesday, Bukit Asam dropped 6.73 percent from the previous trading day, Indofood was down 0.82 percent, BCA fell 2.34 percent and Telkom recorded a downturn of 4.42 percent. Meanwhile, the main gauge was off by 2.83 percent on Wednesday.
Jasa Utama Capital equity analyst Chris Apriliony told The Jakarta Post on Tuesday that the newly imposed 7 percent limit-down was effective enough in holding back the overall fall of the local index as “it minimizes the impact of traders who are panicking and thus are selling their stocks at a very cheap price.”
The limit-down is the maximum share price loss allowed before trading is automatically stopped.
“The fall is mainly due to panic selling as [the weak performance] has not been reflected in the companies’ fundamentals in general,” Chris said, in explaining the reason behind the downward trend in share prices.
