Jakarta Composite Index and fellow investors must be thankful to Joko Widodo as unofficial quick counts showed Widodo - popularly known as Jokowi - was set to win Wednesday’s popular vote. Jokowi and Ma'ruf Amin come at least eight percentage points ahead of challenger Prabowo Subianto, who investors feared would be a champion of economic nationalism.
In just three trading days, Jakarta Composite Index (JCI) posted a gain of 1.58% to the level of 6597.22 and rupiah jumped 0.6 percent to 14,000 per dollar at the start of a seven-week trade. Chief Executive Officer of PT Arah Investasi Mandiri, Hendra Martono Liem, predicted Jokowi Effect Volume II will bring JCI up to a range of 7,100 this year. Moreover, the Jakarta Composite Index was able to become the second best and placed below the Shanghai China Index which trades opened for five days a week. Construction stocks engaged in the infrastructure sector have increased 2-3 days ahead of the presidential election, so there is hope for JCI to break the record of 7,100 at the end of this year.
Uncertainty sure is enemy for market players. With the strengthening value of USD, investors chose to liquidate their asset after rupiah shows its weaknesses. On Monday (4/22/2019), US $ 1 was valued at Rp. 14,070 when the spot market closed. The rupiah weakened 0.21% compared to the closing position of the trade before the Good Friday holiday. The effect of “eminence” has faded and can no longer make the rupiah value last long. After all, the strengthening of the rupiah, JCI, and government bonds over the past week provoked investors to take profit (profit taking).
On the stock market, foreign investors posted net sales of Rp 80.14 billion in the regular market which caused the JCI to close sharply to 1.42%. While on the bond market, the yield on the 10-year benchmark series of government bonds rose 2.1 basis points (bps). The increase in yield is a sign that the price of this instrument is down due to selling pressure.
Therefore it is clear enough to say the euphoria is over. Market players’ objective is to earn profit and not to stabilize the market in its equilibrium. Jokowi Effect Volume II has been completed and we have nothing to do about it.
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