On Wednesday (23/10), the newly elected President of the Republic of Indonesia, Joko Widodo announced his administrations’ cabinet of ministers. Surprisingly, the Indonesian index, Indeks Harga Saham Gabungan took a hit, as the opening price stated that IHSG has fallen by 0,02% to 6.244,42 which means that the IHSG recorded on Wednesday (23/10) started on the red zone. The exchange rate of rupiah has also worsened by 12 points causing its rate to be at Rp14.052 per US dollar. Notable names include the once-more elected Minister of Finance, Mrs. Sri Mulyani Indrawati, the Founder of Gojek, Nadiem Makarim as the new Minister of Education and Culture, and most surprisingly, Jokowi’s opponent during the presidential runoff, Prabowo Subianto as the Ministry of Homeland Security.
The data indicates that market players are either in doubt with the new Cabinet or are simply profit-taking. Sentiment for the cabinet seems somewhat doubtful, especially in the economic sector, as it’s partially filled with figures who possess backgrounds contrary to their supposed expertise, especially since a lot of publicly-supported figures were not included in Jokowi’s list of ministers, such as Mrs. Susi Pudjiastuti, the previous Minister of Maritime Affairs and Fisheries, and the Minister of Creative Economy (which will now be integrated into the Ministry of Tourism), Mr. Triawan Munaf. The cabinet selection was also seen by some as an “awarding” of positions to the people nearest to the president. It is also possible that investors are merely profit-taking due to IHSG partly responding to global sentiments caused by the uncertainty of Brexit and trade wars.
Contrary to its previous date, however, on Thursday (24/10), the first ever cabinet meeting to be held in the new administration, IHSG has progressively improved due to the regulation set by Indonesia’s Central Bank to lower referenced interest rates. This has caused the IHSG to increase by 81,84 points or 1,31% to 6.339,65 as the announcement and inauguration of ministers seems to act as positive catalysts. In addition, Vice Ministers announced on Friday (25/10) mainly have business or financial backgrounds, bolstering the administration with further economic expertise. Market fluctuations are in full force however, as even contradictingly, IHSG went down 1,38% to a level of Rp6.252,34 on Friday. It must be said that it was a surprising turn of events when the announcement of the newest lineup of ministers were met negatively by the market.
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