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INDONESIA POLLS: Stock and rupiah rise on Jokowi expectations

Publication Date : 11-07-2014


Indonesia's stock market and rupiah rose on investors' belief that Joko Widodo would be declared the eventual winner of Wednesday's presidential election in about two weeks, thus allowing him to push ahead with his market-friendly policies.

The Jakarta Composite Index hit a one-year high yesterday, with stocks related to Joko's planned reform agenda leading the gains.

The broader index rose 1.5 per cent to 5,098 points while the rupiah gained 1.25 per cent to 11,549 against the US dollar.

Companies in the infrastructure sector fared well - toll road operator Jasa Marga rose 3.3 per cent and cement maker Semen Indonesia was up 3.2 per cent - amid optimism that Joko, if elected, would carry out his promise of building more roads, dams and sea ports to make economic growth more evenly distributed.

Retailers such as Mitra Adiperkasa also made noticeable gains as investors bet on Joko's pro-people programme that would boost consumer spending in Southeast Asia's largest economy.

The quick counts done by at least five credible pollsters showed that Joko won the election, beating his presidential rival Prabowo Subianto by about a five percentage point margin.

But Prabowo disputed those results and claimed victory instead, using the results of quick counts done by other pollsters deemed less reliable.

"Jokowi's win will stand. We expect the market to start nervously but the rally will gather momentum once the final results are official," analysts Erwan Teguh and Peter P. Sutedja wrote in a note to clients.

"The near-term uncertainty may rattle confidence but we think that it is an opportune time to buy into the market."

Indonesia's Election Commission is expected to announce the official result by July 22.

Bucking the up trend yesterday were media companies which showed quick counts that put Prabowo ahead of Joko.

For instance, shares of Visi Media Asia, which owns TVOne, fell 6.7 per cent, while Media Nusantara Citra, which controls Global TV, MNC TV and RCTI, was down 6.2 per cent.

Satrio Utomo, Universal Broker Indonesia's head of research, told that the media business is based on trust.

"The share declines were so related to the quick count results they broadcast and which the public deemed to be untrue," he said.

Optimism in Joko's victory also pushed up the bond market.

As Joko is "widely regarded as foreign-investor friendly, a confirmed Jokowi win could attract strong flows into the Indonesian bond market", Kumar Rachapudi, a senior bond strategist at ANZ, said in a note to clients.

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