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ndonesia'€™s new President, Joko '€œJokowi'€ Widodo, received a warm welcome from the financial market as local stocks, bonds and the rupiah all strengthened on the day of his inauguration over expectations that the seventh president will push for reforms and bolster growth in Southeast Asia'€™s largest economy.

The Jakarta Composite Index (JCI) '€” the main price barometer in the Indonesia Stock Exchange '€“ hit 5,101.21 shortly before Jokowi'€™s 10 a.m. inauguration ceremony and closed at the highest level in two weeks at 5,040. The rupiah gained 0.64 percent to trade at Rp 12,032 per US dollar.

The yield on the government'€™s 8.37 percent bonds maturing in March 2024 fell 15 basis points, the steepest since Feb. 14, according to data compiled by Bloomberg. Yields move in the opposite direction to prices, so lower yields mean higher prices.

'€œThis might only be the beginning. At least for this week, if investors are happy with his ministerial configuration, the rupiah might strengthen to below the Rp 12,000 level,'€ Mandiri Sekuritas economist Aldian Taloputra said. Jokowi is expected to announce his Cabinet this week.

Another event that is expected to spur on investors in the financial market is a move to raise the state budget-straining subsidized-fuel prices, which will possibly occur next month, at the soonest. The fuel-price hike could bolster growth if spending is re-directed to more productive expenses such as infrastructure.

'€œThe euphoria might last the week but if the market becomes unhappy about the political situation, a big correction in the stock market might be seen,'€ said Satrio Utomo, head of research at Universal Broker Indonesia.

On Monday, foreign investors bought Rp 760.6 billion worth of shares more than they sold, with trading increased with 5.43 billion shares worth Rp 7.58 trillion being traded '€” all above the daily average figures.

All indices on the stock exchange ended in the green and shares of several blue chips '€” including state-run lender Bank Mandiri (BMRI), telecommunication company Telekomunikasi Indonesia (TLKM) and cement firm Indocement Tunggal Prakarsa (INTP) '€” were among the top movers.

The so-called '€œJokowi effect'€ could be seen on the stock market throughout the election year, pushing up the index to hover above the psychological barrier of 5,000 thrice to see an all-time foreign net record buy of Rp 57 trillion in September.

Skeptics, however, still question the sustainability of the rally in the financial market, with Morgan Stanley, the rupiah'€™s most-accurate forecaster in the past year, expecting the rupiah to extend its slide to Rp 12,600 per dollar by year-end as Jokowi struggles to gain support from the legislature.

With the opposing Red-and-White Coalition controlling 63 percent of seats and leadership in the House of Representatives, Jokowi might face hardships during his tenure to realize his programs centering on the economy, infrastructure and fuel consumption.

But following meetings between Jokowi and former presidential candidate Prabowo Subianto as well as Golkar Party chairman Aburizal Bakrie, who are both members of the opposition coalition, political tensions have seemingly eased with the JCI gaining 1.6 percent following the Jokowi-Prabowo meeting.