24 March 2020

In just weeks, the number of COVID-19 cases has ticked up exponentially, breaching 300,000 globally. The outbreak has caused many countries around the world to be in lockdown, crippling economic activity across the globe. As uncertainty grips the stock market amid the coronavirus pandemic, investors race to sell-off their investments and liquidate their equity holdings.

On the home front, MIDF Amanah Investment Bank Bhd’s weekly fund flow report dated 23 March 2020 reported that investors took out RM1.79 billion net of local equities from Bursa Malaysia Berhad (“Bursa”) last week, compared to an outflow of RM1.91 billion the prior week. This bring the total net foreign outflow of RM7 billion to date this year.

In this legal alert, we take a look at the efforts taken by stock exchanges in ASEAN countries to stabilise market volatility in light of COVID-19.


On 19 March 2020, the Securities Commission Malaysia (“SC”) and Bursa issued a joint statement that whilst they acknowledge the current market volatility within a challenging and uncertain environment, they will maintain continuous trading and market operations. This statement comes in response to a call by the chairman of the Association of Stockbroking Companies of Malaysia (“ASCM”) urging the government to immediately suspend the trading on Bursa. The chairman later clarified that the call for suspension of trading was in his personal capacity. In the joint statement, SC and Bursa assured the investing public that market management measures (e.g. circuit breakers, static and dynamic price limit) are in place and known to participants so as to manage excessive volatility. Robust clearing funds, margins and deposits are also in place to ensure clearing and settlement risks are managed. Nevertheless, on 23 March 2020, SC and Bursa issued another joint statement to announce that short-selling will be temporarily suspended until 30 April 2020. This suspension involves intraday short-selling (IDSS) and restricted short-selling (RSS), as well as intraday short-selling by proprietary day traders. The suspension does not however apply to permitted short-selling. On the other hand, where foreign investors are concern, no new policies have been issued by the Central Bank of Malaysia with regards to repatriation of proceeds.


On 17 March 2020, the Philippines Stock Exchange (“PSE”) suspended trade on its local stock exchange, becoming the first country to close its financial market over COVID-19 fears. The suspension order came after its stock market and oil prices went into freefall. However, the PSE resumed trading two days later, on 19 March 2020. Moments after the PSE resumed trade, the PSE index dropped 24% to 1,296.22, its lowest in more than eight years, triggering an automatic 15-minute trading halt. To stem market volatility, PSE announced in a memorandum dated 21 March 2020, that the Philippines Securities Commission and Exchange, the regulator, had given approval to the PSE to amend the lower static threshold from 50% to 30% below the previous close or the last adjusted closing price, whichever is applicable.


On 12 March 2020, trading on the Indonesia Stock Exchange (“IDX”) halted for the first time since the 2008 financial crisis. This was triggered by existing circuit breaker as the Jakarta Composite Index (“JCI”) crashed more than 5%, causing the IDX to suspend equity trading 30 minutes before the day’s session ended.  The IDX was halted again on 13 March 2020, on 17 March 2020 and on 19 March 2020, each time triggered by the decline in the JCI reaching 5%. On 23 March 2020, the IDX halted for the fifth time this month as the JCI fell by 5% to 3,985, the lowest in eight years since June 2012 as Indonesia recorded more COVID-19 cases.

On 13 March 2020, new rules were announced by the IDX that it will halt trading for stocks that have fallen 7% and will scrap pre-opening trade as it moves to safeguard the local market from steep drops amid a historic global market rout. This new rule changes the stipulation that had allowed all stocks to fall below 10% before facing auto rejection, in which the IDX’s trading system will automatically reject a bid lower or higher than certain a certain percentage drop or increase.

Earlier on 10 March 2020, the IDX had also issued a new policy on trading suspension for the broader stock index, where the exchange will halt trading for 30 minutes if the JCI falls by more than 5%. If the index keeps falling to more than 10% after the first suspension is lifted, the bourse will halt trading for another 30 minutes. Trading will be stopped entirely if the JCI plunges deeper than 15%. The suspension can last for more than one day with approval or upon instruction from the Financial Services Authority (OJK). Apart from that, the IDX also decided to temporarily halt short selling on 9 March 2020 until further notice and will stop publishing the list of stocks available for short selling. In addition, the Financial Services Authority announced that it would allow listed companies to buy back shares up to 20% of paid-up capital without a prior shareholders meeting to ease market volatility.


On 12 March 2020, the Stock Exchange of Thailand (“SET”) was halted, triggered by a circuit breaker when losses reached 10%. The SET index tumbled as much as 12%, the most since December 2006. On 13 March 2020, the SET was halted again for the second straight day, as the circuit breaker was triggered following a 10% plunge to 1,003,39.

On 17 March 2020, the SET launched the first measure by tightening short selling to trade only the price higher than the last trading price (uptick). The SET also announced further tightening of trading measures by adjusting ceiling and floor criteria and circuit breaker (temporarily halt in trading) rule, effective from 18 March 2020 and would last no longer than 30 June 2020. Under the new circuit-breaker regulations, a circuit-breaker will be triggered in three stages:

  • First stage, equity trading will be halted for 30 minutes if the SET index falls by 8%, down from the previous 10%.
  • Second stage, trading will be halted for an additional 30 minutes if the SET index plunges by 15%, a change from a 60-minute intermission for a 20% decline.
  • Third stage, trading will be halted for 60 minutes if the SET index continues to fall by 20%.

When trading resumes after the third circuit breaker, the market will continue trading regardless of whether the drop continues until market closes that session.

In relation to the revised ceiling and floor criteria, the SET’s committee had approved to adjust the stock ceiling-floor to plus or minus 15% from the previous 30% to lessen volatility.

As for the rest of the ASEAN countries, no extraordinary measures have been taken by the stock exchanges of Singapore, Cambodia, Laos, Myanmar and Vietnam to-date. Brunei does not have a stock exchange.


JURISDICTIONShort Selling RestrictionsMarket ClosureNo Extraordinary Measures Taken

(suspended intraday short-selling (IDSS) and restricted short-selling (RSS), as well as intraday short-selling by proprietary day traders)


(revised lower static threshold)

(trading resumed two days later)


(revised circuit breaker rule, eased buyback rules and imposed short selling ban until further notice)


(revised circuit breaker rule and adjusted ceiling and floor criteria)


(Singapore Exchange trading as usual)


(Cambodia Securities Exchange trading as usual)


(Lao Securities Exchange trading as usual)


(Yangon Stock Exchange trading as usual)


(Ho Chi Minh Stock Exchange trading as usual)

BruneiDoes not have a stock exchange



As can be observed above, Indonesia has been the most proactive in reacting to the stock market volatility among the ASEAN countries. It has eased buyback rules, imposed trading limits and put a short-selling ban in place. Notably, Philippines has taken the most drastic measures by ceasing all trades on its stock exchange, whilst Malaysia and Thailand have taken some initiatives to stabilise market volatility in light of COVID-19. Further, the stock exchanges in Indonesia, Thailand and Malaysia have assured the investing public that they will take precautionary measures to mitigate potential risks arising from heightened volatility and remain committed to ensuring a conducive trading environment. As the situation develops, not only will we see more actions taken by the stock exchanges and regulators, but also by the central banks and government. In this regard, as securities law practitioners, we will continue to monitor new securities regulations that may be issued, whether through specific laws, policies, guidelines, or otherwise.

If you have any questions or require any additional information, please contact Gilbert Gan, Chan Xian Ai or the Zaid Ibrahim & Co. partner you usually deal with.

This alert is for general information only and is not a substitute for legal advice.


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