Jakarta. Major state-owned companies are planning a share buyback worth more than $550 million, a senior official at the State-Owned Enterprises Ministry has said, following a lead from Indonesia's financial supervisory agency to shore up the market. 

The Financial Services Authority (OJK) on Monday relaxed its share buyback rule to bypass an administrative requirement in favor of encouraging quick action from companies to stop the country's stock market from hemorrhaging. 

The agency said listed companies can now buy back up to 20 percent of its shares in the stock exchange without approval from a shareholders' general meeting, as long as they keep the float – the number of publicly owned shares – at 7.5 percent.

Under the previous rule, any buyback above 10 percent required a shareholders' approval.

The new ruling was part of the OJK's efforts to "stimulate the economy and dampen the impact of significant fluctuation in the financial market," the agency said in a statement. 

Arya Sinulingga, SOE Minister Erick Thohir's special staff, said 12 state-controlled lenders, constructing and mining companies had told the minister they would be able to cough up a total of Rp 7 trillion–Rp 8 trillion ($491 million–$562 million) to buy back their shares during the bearish market. 

"The buyback period has begun... the JCI [Jakarta Composite Index] has gone down. Companies' fundamental values have exceeded the value of transactions in the market," Arya said. 

Indonesia's stock market saw its biggest daily drop in nine years on Monday following a global market rout triggered by renewed panic about the Covid-19 outbreak outside China and an oil price war between Saudi Arabia and Russia, the world's second and third-largest oil producers, that sent oil prices tumbling to its lowest level since 2016. 

The JCI fell 6.6 percent to 5,136.8 as investors dumped blue-chip stocks in Bank Central Asia, automotive conglomerate Astra International and state-owned telco Telekomunikasi Indonesia. 

Lenders who have committed to the buyback plan include Bank Rakyat Indonesia, Bank Mandiri, Bank Negara Indonesia and Bank Tabungan Negara.

In the construction sector, Wijaya Karya, Adhi Karya, PP, Jasa Marga and Waskita Karya have said they would also follow suit.

Mining companies Aneka Tambang (ANTM), Bukit Asam and Timah, have also pledged their commitment. 

"The [buyback] strategy would be left to each of the companies to decide," Arya said.

The stock market rebounded 2.3 percent at the break on Tuesday following news about the SOEs' buyback plan. 

Hari Prabowo, the head of Investa Capital Market Institute (LP3M Investa), said the stock buyback should return some confidence to the market.

Companies buying their own stocks during a bearish market would prevent stock prices from deviating too much from their real value. Also, the companies can make gains when they sell the stocks later at a higher price, Hari said. 

"Investors should not panic too much and start paying more attention to company fundamentals and their future prospects. As long as the companies remain solid, we should be optimistic that prices will rise again," Hari told Investor Daily.

Meanwhile, authorities have said they have more tricks up their sleeves to shore up the financial market. 

Finance Minister Sri Mulyani Indrawati said the government would work closely with Bank Indonesia, the central bank, and the OJK to create additional policies to stabilize the market. 

Sri Mulyani said the policy options include buying back government bonds.