Indonesian shares rebounded on Tuesday as investors gained confidence after incumbent President Joko “Jokowi” Widodo and his running mate Ma’ruf Amin were declared the winners of the bitterly contested election last month by a double-digit margin
span>Indonesian shares rebounded on Tuesday as investors gained confidence after incumbent President Joko “Jokowi” Widodo and his running mate Ma’ruf Amin were declared the winners of the bitterly contested election last month by a double-digit margin.
After its biggest weekly slump last week, the Jakarta Composite Index (JCI), the main share price indicator of the Indonesian Stock Exchange, gained almost 1 percent in the morning session after the announcement of the election results. However, the price index gained only 0.75 percent in afternoon trading to end the day at 5,951.
Royal Investium Sekuritas equity analyst Janson Nasrial said the announcement had given a boost to the stock market as investors believed that the reelection of Jokowi would create more certainty in the government’s efforts to revive the economy.
The General Elections Commission (KPU) announced the official results in the early hours of Tuesday morning, a day earlier than initially planned. Jokowi and Ma'ruf Amin received 55.5 percent of the vote, compared with 44.5 percent for Prabowo Subianto and his running mate Sandiago Uno.
The election results eased the negative sentiment coming from the concerns over the escalation of the trade war between the United States and China, which had contributed to selling pressure in stock markets since early last week, Janson said.
Shares of a number of companies linked to the chairman of Jokowi’s team, Erick Tohir, also rallied on Tuesday. Shares of media company Mahaka Media, owned by Erick Thohir, and coal miner Adaro Energy, owned by his brother Garibaldi Thohir, were among the top gainers.
However, despite the increase in share prices, the selling spree by foreign investors continued. According to stock market data, net foreign sales stood at Rp 643.08 billion (US$44.41 million) during the day. Foreign investors also sold blue chip shares such as in Bank Mandiri and Telekomunikasi Indonesia.
Janson said the large volume of foreign sales indicated that foreign investors were still concerned about escalating US-China trade tensions.
Janson predicted that the JCI would also weaken on Wednesday and fluctuate between 5,875 and 5,925.
However, the announcement of the election results failed to revive the rupiah, which fell 0.17 percent to 14,480 per US dollar on the spot market. The Jakarta Interbank Spot Dollar Rate also showed that the rupiah had weakened 0.11 percent to 14,462 per dollar.
Center of Reform on Economics Indonesia research director Piter Abdullah said the rupiah was under pressure during the day because of an increase in foreign capital outflows from the local stock and bond market.
Piter forecast that the rupiah would continue to weaken following fears that protests by Prabowo Subianto supporters could cause instability. He estimated the rupiah would fluctuate between 14,450 and 14,550 to the dollar this week.
Meanwhile, other Asian shares won some respite on Tuesday after Washington temporarily eased trade restrictions imposed last week on China’s Huawei, although fears of a further escalation in tensions kept investors on edge.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up a marginal 0.1 percent but stayed close to the four-month low recorded on Friday, Reuters reported. It has fallen almost 8 percent from a nine-month peak that was recorded just over a month ago. Japan’s Nikkei average retreated 0.3 percent.
China’s blue-chip CSI300 index jumped 1.4 percent a day after it fell to a three-month intraday low as Washington allowed Huawei Technologies to purchase American-made goods to maintain existing networks and provide software updates to Huawei handsets until Aug. 19. The benchmark Shanghai Composite climbed 1.2 percent.
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