INVESTORS cheered a clear-cut victory for Defence Minister Prabowo Subianto in unofficial counts in Indonesia’s presidential race, with stocks headed for their sharpest rise in a year.
The Jakarta Composite index last traded 1.7 per cent higher after earlier hitting an over one-month peak, and was inching toward the record high of 7,403.578 points hit in January.
Prabowo declared victory after unofficial “quick counts” by independent pollsters – which have proven to be accurate in past elections – showed the former special forces commander clinching about 58 per cent of votes in Wednesday’s election.
The removal of political uncertainty aided sentiment, analysts said, as Prabowo’s comfortable lead squelched the likelihood of a second round election, which would have been necessary if no candidate had an outright majority.
Banks, nickel miners and processors, as well as infrastructure-related companies led gains on the bourse.
Prabowo has promised to follow predecessor Joko Widodo’s policies of massive infrastructure spending which includes the construction of Indonesia’s new capital, and turning the country into an Asian hub for manufacturing electric vehicles.
Among the top performers on Thursday (Feb 15), Bank Mandiri and Bank Rakyat Indonesia rose nearly 4 per cent and 2.5 per cent, respectively.
Cement producer Indocement Tunggal Prakarsa jumped 6 per cent, while nickel producer Merdeka Battery Materials surged more than 6 per cent.
“Amid expectations of stronger economic growth and foreign fund inflows, we see that the big-cap stocks will potentially benefit from the anticipated domestic and foreign fund inflows,” said analysts at BRI Danareksa Sekuritas in a note.
“The expectation of higher growth may also benefit consumer discretionary stocks, while in past post-election periods, property stocks have also performed well.”
A coalition of parties backing Prabowo had about 43 per cent of votes, unofficial counts in the legislative contest showed, indicating a potential Prabowo government could have strong parliamentary backing.
The currency and bond markets were meanwhile more circumspect, with the rupiah last 0.2 per cent lower at 15,615 per dollar. It had touched a one-month high of 15,545 earlier in the session.
Indonesian government bonds were similarly little changed, as investors awaited further details on the country’s new Cabinet line-up and how Prabowo’s policy pledges would play out.
The 10-year yield was last at 6.636 per cent, according to LSEG data.
“We remain cautious on adding Indonesian exposure,” said Daniel Tan, portfolio manager at Singapore-based Grasshopper Asset Management.
“Prabowo’s previous remarks that he plans to fund social assistance programmes and implement his fiscal priorities through raising debt-to-GDP ratio would raise some concern among investors, given Indonesia’s past fiscal prudence.” REUTERS
