Indonesian stock prices rallied strongly while the rupiah posted significant gains on Friday after Jakarta Governor Joko “Jokowi” Widodo was officially nominated to contest the upcoming presidential election.
The benchmark Jakarta Composite Index (JCI) gained 3.22 percent to close at 4,878.64 in active trading, while the rupiah advanced 0.3 percent to 11,355 (99 US cents) against the US dollar.
The Jokowi effect helped the index to counter the downward trend among emerging markets, which mostly dropped due to escalating concerns that China’s economic slowdown and the ongoing crisis in Ukraine could trigger massive capital outflows.
The JCI, which has gained more than 20 percent since it dropped to last year’s lowest level at the end of August, was one of two indexes that ended higher on Friday among 13 emerging market indexes tracked by the Indonesia Stock Exchange (IDX). Another index that ended higher was Thailand’s SET Index, which inched up 0.12 percent. Total net foreign buy on Friday reached Rp 7.48 trillion.
Megawati Soekarnoputri, the chairperson of the Indonesian Democratic Party of Struggle (PDI-P) officially named on Friday Jokowi as the party’s candidate for the July presidential election.
Jokowi, who only became Jakarta governor in October, last year, topped almost every poll conducted recently. In the January poll carried out by the Indonesian Survey Circle, he garnered 35.6 percent of the vote, the highest compared to other potential candidates.
Golkar party chairman Aburizal Bakrie, for example, only received 20.1 percent, while Gerindra’s Prabowo Subianto garnered 19.7 percent
Analysts said the announcement of Jokowi’s candidacy caused euphoria among many sections of the public.
“The market likes Jokowi because of his clean track record, his image as a man of the people and his decisiveness,” Purwoko Sartono of Panin Sekuritas security firm said. Purwoko felt the nomination of Jokowi would continue to have a positive affect on share trading over the next few days.
Harry Su of Bahana Securities shared a similar opinion, saying that his track record during his time as Jakarta governor was quite encouraging.
“I think the policies [under Jokowi should he be elected president] will be the same, which is basically market friendly. However, the main difference will be in relation his decisiveness in implementing policies, which we have witnessed during his tenure as Jakarta governor,” Harry said.
Foreign financial analysts also gave different views on the nomination of Jokowi. “There’s a shift in sentiment in the market,” Andy Ji, a Singapore-based strategist at Commonwealth Bank of Australia said as quoted by Bloomberg. “But it’s a long shot to expect that when one person wins, the whole macro picture will change, which I don’t think will happen.”
Khoon Goh, a senior foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. in Singapore, told Bloomberg that the market was responding positively to his nomination. “We know he’s very popular and we know that he is known as ‘Mr. Fix-it’ but it’s a big move going from mayor to president of a very large country.”
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