Earlier, China and Taiwan had already imposed extraordinary measures in a move to prevent panic selling amid a global rout triggered by concern about China’s economic slowdown after the country allowed its yuan to devalue (in an apparent attempt to boost its export performance).

Indonesia’s benchmark Jakarta Composite Index (IHSG) is the worst performing stock index in Southeast Asia, having slid about 19 percent so far this year. Last Friday it entered a bear market as it had fallen 20 percent since a peak in early April.

Last week Indonesia issued regulations that allow listed state-controlled companies to buy back shares in order to curtail excessive market fluctuations. State-Owned Enterprises Minister Rini Soemarno announced that a selection of listed state-owned companies will spend a combined IDR 10 trillion (approx. USD $712 million) for this share buyback program. Meanwhile, in the bond market Indonesia’s Finance Ministry conducted a total of three government bond buybacks (worth IDR 1.4 trillion, or, approx. USD $100 million) in August. The country’s debt and risk management office stated it is to spend more on buybacks to support Indonesia’s sovereign bond market.

On Tuesday (25/08), the IDX also announced it is investigating (and has sent warning letters to) several security traders (Credit Suisse Securities Indonesia, Daewoo Securities Indonesia, Mandiri Sekuritas, CLSA Indonesia and Maybank Kim Eng Securities) on grounds of alleged irregular short-selling during Monday’s trading day. Since 2009 irregular short-sell transactions in Indonesia are punishable by up to ten years imprisonment and fines of up to IDR 15 billion (approx. USD $1 million).