Indonesian Indonesia Speeding Up Reforms To Restore Investor Confidence After Stock Market Slumpaccelerating market reforms to restore investor confidence following a two-day stock market rout that sparked the resignations of Indonesia Stock Exchange CEO Iman Rachman and Financial Services Authority chairman Mahendra Siregar.
The benchmark Jakarta Composite Index tumbled more than 10% on Wednesday and Thursday—the worst sell off since the Asian financial crisis—after Morgan Stanley Capital International warned of a possible downgrade of the Indonesian equities market unless regulators move to broaden ownership in local companies. Stocks recouped some losses on Friday after the government promised to fast-track reforms.
The government said it will double the free float requirement to 15% for listed companies, improve ownership transparency, and raise the stock market investment limit for insurance companies and pension funds from 8% to 20% to help support the market.
“The government affirms its commitment to maintaining the stability and credibility of the Indonesian capital market through a series of strategic and measured steps,” Airlangga Hartarto, coordinating minister for economic affairs said in a statement.
The government is moving to accelerate reforms amid increasing scrutiny of the country’s capital markets. Last year, investor confidence had been hit by the abrupt departure of Finance Minister Sri Mulyani Indrawati last year amid a widening fiscal deficit.
"The government urges market players to remain calm and view this situation as a momentum for adjustment towards a healthier market," Airlangga said.