Jakarta. Jakarta's peaceful runoff election reflects Indonesia's stability and should reassure investors interested in its stock market, analysts said on Wednesday (19/04).
"I think the gubernatorial election will be a positive catalyst to the JCI [Jakarta Composite Index] tomorrow; the government was working hard to maintain security during the second round of the election. It gives an assurance to investors, both foreign and local, to invest more, and we also expect a capital inflow after the election," said Binaartha Sekuritas analyst Nafan Aji.
Indonesia's stock market has gained 6.5 percent since the beginning of the year, with the financial, mining and miscellaneous sectors in the lead. Foreign capital inflow into the country's stocks and bonds market reached Rp 81 trillion ($6.1 billion) by the second week of April, up 35 percent from the same period a year ago.
Local pollsters predicted the win of Anies Baswedan, who was backed by retired army general Prabowo Subianto and his Great Indonesia Movement Party (Gerindra), and tycoon Hary Tanoesoedibjo's Indonesian Unity Party (Perindo).
"The election ran smoothly and peacefully. This is really good for the market and will also boost the JCI tomorrow," said Edwin Sebayang, an analyst at MNC Sekuritas, which is affiliated to Hary's Media Nusantara Citra Group.
While claiming that the post-election euphoria will only last until early May, Edwin said that the JCI will stand at 5,950 by year end, 6 percent up from today.
Nafan, however, was not that optimistic: "Realistically, the JCI will reach 5,750 by the end of the year. External factors, such as the Fed rate hike or French election will have a negative impact on the JCI," he said.
According to both analysts, companies linked to Anies's running mate Sandiaga Uno and their supporter Hary will rise in short term, as traders often ride on election euphoria.
These companies include Saratoga Investment Sedaya, an investment holding company founded by Sandiaga, who holds a 27.8 percent share in it, and companies from Hary's MNC Group.
Saratoga controls, among others, Agro Maju Raya and Provident Agro, both plam oil producers, and gold miners Merdeka Copper Gold and Sumatra Copper & Gold. Among MNC Group's listed companies are free-to-air television operator Media Nusantara Citra, property developer MNC Land and holding company MNC Investama.
Minna Padi Investama equity analyst Christian Saortua, however, said that more cautious investors may take more time to evaluate the companies' bases.
"Whoever won the election, it would not directly impact the business as they need more time to plan," Christian said.