F

inancial market experts welcomed quick count results of presidential election on Wednesday that mostly showed a victory for Joko '€œJokowi'€ Widodo, but said that overly bullish actions were not recommended due to a possible political stalemate after rival Prabowo Subianto also claimed a win in the nation'€™s tightest poll ever.

The benchmark Jakarta Composite Index (JCI) could advance as high as 4 percent on Thursday, OCBC Bank economist Wellian Wiranto said following the announcement of quick count results. The stock index already rallied 1.7 percent on Monday and 0.7 percent on Tuesday to 5,024. The stock market was closed on election day.

A triumph for '€œmarket friendly'€ Jokowi, who is expected to push for reforms in and boost Southeast Asia'€™s largest economy, could help push the JCI to 5,200 by the end of July, before strengthening further to 5,550 before year-end in the most bullish scenario calculated by John Rachmat, an equity analyst with state-run Mandiri Sekuritas.

'€œThe Indonesian stock exchange will enjoy a multi-year rally with the election of a transformative leader '€” similar to what happened in the Philippines after the election of Benigno Aquino,'€ John wrote in an email interview on Wednesday.

When Jokowi announced his presidential candidacy on March 14, the JCI posted its biggest daily advance in six months as it rose by 3.2 percent.

In the currency market, Malaysia-based Maybank forecast the rupiah to strengthen to about 11,500 per US dollar today, compared to 11,695 on Tuesday, according to the Jakarta Interbank Spot Dollar Rate (JISDOR). The rupiah also already surged 1.5 percent on Monday and 0.7 percent on Tuesday.

US-based investment bank Morgan Stanley has predicted that a Jokowi victory would propel the rupiah to 11,000 per US dollar.

'€œThe rupiah will appreciate so strongly tomorrow because politics, based on my 10 years of experience as a lawmaker overseeing economy, has always been an important variable toward movement in our financial markets,'€ said Maruarar Sirait, member of the House of Representatives Commission XI overseeing financial affairs from the Indonesian Democratic Party of Struggle (PDI-P), which backed Jokowi.

Other analysts remained vigilant regarding the possibility of a deadlock, as the Prabowo camp also claimed victory, citing different surveyors.

Quick counts from the Indonesian Survey Institute (LSI), state-run radio station RRI, Saiful Mujani Research and Consulting (SMRC) and Kompas newspaper'€™s research center all yielded results in favor of Jokowi, but three other surveyors, namely the Indonesia Votes Network (JSI), the Strategic Development and Policy Research Center (Puskaptis) and National Survey Institute (LSN), showed the opposite. The margins were tight, at up to 6 percent.

The General Elections Commission (KPU) will announce the official result on July 22, but further delays are possible in the event that a candidate challenges the result at the Constitutional Court (MK).

The fact that both candidates claimed victory risks a contested election outcome, thus potentially bringing a period of uncertainty for Indonesian financial markets, said Chua Hak Bin, an economist with Bank of America Merrill Lynch.

'€œInvestors may also be nervous about the potential risk and violence, if Prabowo supporters refuse to accept the results,'€ he said on Wednesday. '€œAllegations of cheating may also add to the uncertainty. Markets will be fearful of a scenario where a political vacuum and paralysis is long drawn.'€