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The world’s major stock market indices have shown a noticeable dip since the start of the coronavirus, the Association of Southeast Asian Nations (ASEAN) markets have seen considerable declines in stocks which has led the Indonesian Stock Exchange (IDX) to ban short selling.
The IDX has been keeping a watchful eye on the global spread of the coronavirus since its outbreak. However, after the announcement of the countries first reported cases on Monday and the Jakarta Composite Index's (JCI) collapse, the exchange implemented the short selling ban in order to calm the markets.
Since the beginning of 2020, the JCI has dropped by 13.44 percent, this level of decline has also been experienced by many of the global exchanges, most significantly throughout Asia.
According to Bloomberg, ‘the highest decrease was experienced by Thailand, followed by Indonesia, the Philippines, Vietnam, Malaysia and Singapore with decreases of up to 15.15 percent’.
In a statement released by the exchange, the IDX explains how they have coordinated with the Financial Conduct Authority (FSA) and the government to formulate initiatives and incentives to be provided to anticipate the impact of the coronavirus on activities in the Indonesian Capital Market.
The decline in the last week of February 2020 was the biggest contributor to the drop-off in the index of the world's major exchanges in ASEAN. The highest decrease was experienced by the Philippines, Indonesia, Vietnam, Singapore and Malaysia with weekly decreases of up to 7.9 percent.
Many market commentators doubt that this measure will prevent further decline.
Further to the exclusion of short selling transactions, the IDX has stated they will not publish a list of securities that can be traded in short selling. The time limit on the ban has yet to be determined, and investors are being urged to continue investing based on in-depth analysis.
In the midst of the JCI movement and the world's economy, IDX has confirmed that they will continue to strive to strengthen the role of exchange members through strengthening market supervision, the supply of market products, and conducive trade arrangements.
