JAKARTA: Indonesia’s financial regulator said on Wednesday it would temporarily loosen share buyback rules following the worst market fall in more than a decade. Indonesia’s benchmark Jakarta Composite Index, or JCI, plummeted more than 7 percent on Tuesday, the biggest plunge since September 2011, over concerns about the domestic economy and weakening consumer spending.

The fall forced the Indonesia Stock Exchange to halt trading for 30 minutes for the first time since the Covid-19 pandemic in 2020.

“We announce that listed companies can do a buyback without the general meeting of shareholders,” Inarno Djajadi, a senior official at the Indonesian Financial Services Authority, or OJK, told a news conference. The policy would be valid for the next six months, he said.

“This... is expected to give a positive signal that the companies have good fundamentals and to give market confidence to investors,” Inarno said.

He said easing buyback rules was also expected to give companies the flexibility to react to high market volatility. The OJK said Indonesia’s stock trading has seen a significant fall since September last year.

Inarno said the high market volatility was caused partly by the United States’ tariff policy, trade wars, and unstable geopolitical developments. William Jackson of Capital Economics said on Tuesday plunging stocks indicated growing worries about fiscal policy and the state’s role in the economy under President Prabowo Subianto. Prabowo has issued several controversial policies since he was sworn in last October, including free meals programs that put a huge burden on state coffers and massive cuts to government spending, triggering student protests across the country.

Domestic consumption has also slowed down, forcing the Central Bank of Indonesia to cut interest rates in January to boost growth despite a weakening rupiah. — AFP