The Jakarta Post
More publicly-listed companies are joining the plan to buy back shares as economic uncertainty caused by the COVID-19 outbreak continues to undermine stock prices, an official of the Financial Services Authority (OJK) has said.
OJK commissioner for stock market supervision Hoesen said on Tuesday in a teleconference with House of Representatives Commission XI, which oversees financial affairs, that 61 companies had announced plans to buy back shares.
“They consist of 12 state-owned enterprises (SOEs) and 49 private companies,” Hoesen told the participants of the online meeting.
The total buyback value of the 61 companies amounts to about Rp 17.4 trillion (US$1.08 billion), Hoesen noted, saying that about Rp 726 billion worth of shares had already been bought and the rest would follow suit.
“From the 12 SOEs, the value of the commitment is around Rp 10.15 trillion and for private companies, around Rp 7.23 trillion,” he explained.
Seven of the 12 SOEs had conducted the buyback with a total value of Rp 145 billion. Meanwhile, 27 of the 49 private companies had bought back shares for Rp 581 billion.
The buyback initiative is part of the OJK’s effort to prevent share prices on the Indonesian Stock Exchange (IDX) from plunging deeper as the bourse has witnessed historic falls due to COVID-19-related market panic.
“Lately, there were more greens than reds,” OJK chairman Wimboh Santoso said in reference to fluctuation of share prices. He added that the roll-out of policies to calm down the market, including the buyback initative, had slowed the market fall.
As of Wednesday, the Jakarta Composite Index (JCI) was down 26.37 percent year-to-date (YTD). The index had plunged to 3,900 points in the fourth week of March, the lowest seen since October 2015.
However, in the past two weeks, the bourse has shown signs of recovery following historic measures taken by central banks around the world to fight the impact of the health crisis.
From March 23 to Wednesday’s closing, the JCI climbed 15.97 percent. The index ended Thursday’s morning session at 4,269.29 points, up very slightly from the previous trading day’s close at 4,626.70.
The OJK announced on March 9 that it would allow listed companies to buy back shares up to 20 percent of paid-up capital without prior shareholders meeting in an attempt to ease market volatility. It also required companies to maintain free-float shares of at least 7.5 percent.
“This is as an effort to stimulate the economy and reduce the impact of the significantly [market volatility],” the OJK said in a statement.
Following the announcement of the new policy, Arya Sinulingga, an aide to SOEs Minister Erick Thoir, told reporters on March 10 that the buyback was needed “as prices of their shares had fallen far below their book value”.
Among the 61 companies, state-owned Bank Rakyat Indonesia (BRI) announced a sizable buyback totaling to Rp 3.8 trillion.
The bank’s shares, traded on the IDX under the code BBRI, have fallen by 36.05 percent so far this year despite a 7.6 percent increase between March 23 to Wednesday’s closing.
Meanwhile, diversified petrochemical giant PT Barito Pacific, whose shares trade on the IDX under the code BRPT, also announced that it would allocate Rp 1 trillion to buy back shares.
Since the start of the year, its shares price has declined by 36.86 percent, but similar to BRI, it has recorded an upward trend in recent weeks. The shares of Barito Pacific surged 88.78 percent to Rp 925 per share on Wednesday from Rp 490 on March 23.