Jakarta. Financial regulators are taking decisive steps to stabilize the stock market as global and domestic uncertainties weigh on investor sentiment. The Financial Services Authority (OJK) and the Indonesia Stock Exchange (IDX) have postponed short-selling plans set for the second quarter and are considering easing share buyback regulations to counter a sharp decline in the benchmark Jakarta Composite Index (JCI)

OJK’s Chief Executive for Capital Markets Supervision, Inarno Djajadi, said the regulator is implementing these measures to provide investors with greater flexibility while maintaining market efficiency.

“Market downturns are not unique to Indonesia; global exchanges have also introduced stabilization policies in response to recent declines,” Inarno said in a press briefing Monday.

IDX President Director Iman Rachman highlighted similar moves in regional markets, such as Thailand’s stock exchange, which recently tightened regulations on high-frequency trading and short selling while relaxing price fluctuation limits.

Indonesia has seen one of the steepest stock market declines in Southeast Asia after Thailand, with foreign investors net-selling Rp 21.9 trillion ($1.3 billion) over the past two months. Meanwhile, Thailand reported the largest outflow, with foreign investors pulling Rp 47.8 trillion.

Market Pressures
A combination of global and domestic factors has fueled the JCI’s decline. Key concerns include escalating US trade tensions, particularly tariff disputes with China, Mexico, and Canada, as well as uncertainty surrounding Federal Reserve interest rate policy.

“The Fed’s hawkish stance is driving capital outflows from emerging markets, pushing investors toward safe-haven assets,” said Iman.

Adding to investor unease, Morgan Stanley downgraded Indonesian equities from “equal weight” to “underweight,” citing slowing economic growth and weaker corporate earnings in cyclical sectors.

The rupiah has also been under pressure, weakening 2.88 [ercent year-to-date to Rp 16,580 per US dollar, its lowest level since April 2020.

Corporate Leaders Back Buyback Policy

The proposed relaxation of share buyback rules has received strong backing from business leaders. Alamtri Resources Indonesia President Director Garibaldi “Boy” Thohir welcomed the move, arguing that current market conditions do not reflect the true value of blue-chip stocks.

“We are prepared to initiate buybacks as soon as the approval is granted,” Boy said.

At the same time, Indonesia Chamber of Commerce and Industry (Kadin) Chairman Anindya Bakrie and Advisory Council Chairman Arsjad Rasjid highlighted the possibility of buybacks by affiliated companies to counteract the JCI’s recent slump.

Arsjad, who is also the CEO of Indika Energy, said that without requiring shareholder approval could be an effective tool to shield stocks from excessive external pressure.

“A buyback is one way to protect issuers from extreme market fluctuations. If we have to wait for a shareholders' meeting, strategic opportunities may be lost,” Arsjad said.

Regarding Indika Energy’s potential buyback, Arsjad said the company is monitoring market developments and would consider repurchasing shares if it proves beneficial.

“We’re waiting to see how the situation unfolds. But if buybacks make sense, why not? We believe our stock should be valued higher,” he added.

Anindya Bakrie echoed these sentiments, saying that buybacks could boost market confidence and enhance corporate fundamentals. He stressed that any buyback strategy should be long-term rather than a temporary market intervention.

“This should not be just a short-term measure but a structured approach to navigating market fluctuations,” Anindya said.

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