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(Bloomberg) — Companies linked to Indonesian billionaire Prajogo Pangestu said they would buy back shares, in a bid to shore up prices after last week’s market meltdown.
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PT Barito Pacific, PT Chandra Asri Pacific and PT Petrindo Jaya Kreasi plan share repurchases of as much as a combined 3.75 trillion rupiah ($224 million), according to filings to the Indonesia Stock Exchange on Tuesday and Wednesday. The companies will buy shares from Feb. 4 to May 3.
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Shares of Barito Pacific jumped as much as 9.6%, the most since Sept. 24, following the announcements. Chandra Asri and Petrindo Jaya Kreasi also gained.
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“In light of the recent market volatility, the Group’s management believes that its immediate priority is to help support market stability while reaffirming our full commitment to the group’s long-term strategic business expansion,” said a Barito Pacific spokesperson in an email response for comment. With regards to new requirements to raise minimum free float to 15% from 7.5%, “we are closely monitoring ongoing regulatory developments and will await further regulatory guidance,” the spokesperson said.
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The share buybacks come as Indonesia’s market saw its worst two-day rout in nearly three decades at one point last week, spurred by MSCI Inc.’s concerns over investability and warning of a potential downgrade to frontier-market status. Prajogo-owned firms were among the hardest hit in the selloff, whose net worth dropped by around $9 billion after his energy and mining companies slid.
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“The Indonesian tycoons are trying to signal the market that their stocks are cheap. It is a show of confidence,” said John Foo, founder of Valverde Investment Partners Pte. “The next few weeks will be uncertain due to the MSCI overhang.”
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At the heart of MSCI’s concerns is the low free float of Indonesian equities. Many of the country’s largest companies are thinly traded and controlled by a small number of wealthy individuals — a structure that investors say distorts index performance and increases the risk of manipulation. The issue has been a point of contention for years, with critics arguing that low liquidity renders large portions of the market uninvestable and difficult to track.
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Companies with concentrated ownership include Petrindo Jaya Kreasi, which is 84% owned by Prajogo, and Barito Pacific, in which he holds a 71% stake, according to their latest filings.
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—With assistance from Bernadette Toh.
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