Indonesia, Taiwan act to protect markets
JAKARTA: Indonesia stepped up efforts to protect its battered financial markets from global volatility yesterday, imposing new daily limits on how much shares can fall and organising a concerted share buyback programme.
Indonesia’s stock index is the worst performer in Southeast Asia this year, falling around 20%, while the rupiah has fallen to a 17-year low against the dollar.
To reduce market volatility, the stock exchange yesterday tightened the daily limit on how much all shares can fall to a maximum of 10%, from the previous 20-35% range, depending on a stock’s price.
The cap on daily price gains will be kept at between 20% and 35%, the exchange said in a statement.
While the benchmark index closed up 1.56% yesterday, a number of stocks tumbled by the new daily limit, including gas producer PT Surya Eka Perkasa and lender Bank Woori Saudara.
The broader market found support from state-owned firms, which launched a government-backed plan to buy back at least 10 trillion rupiah (RM3.3 billion) of their shares.
Authorities looked to prop up the rupiah by intervening in the foreign exchange and government bond markets. The currency dropped to as low as 14,085 against the dollar yesterday, the weakest since July 1998.
Meanwhile, Taiwan gave the green light for a fund to stabilise its troubled stock market, after fears of a slowdown in China sent shares diving.
Taipei shares posted the island’s steepest ever intra-day decline on Monday, hit by a rout in Chinese equities that sparked a panic sell-off in European and US markets.
In response, the government will use the National Financial Stabilisation Fund, with its NT$500 billion (RM64.75 billion) of firepower, to stabilise the market during times of volatility.
Beyond that, executive secretary of the restabilisation fund committee Wu Tang-chieh will be left to decide on how to invest, a government statement said.
Shares rebounded by 3.58% yesterday, boosted by the announcement of government intervention. – Agencies