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Market Ambiguity After Cabinet Reshuffling

Approaching the end of 2020, President of The Republic of Indonesia, Joko Widodo, along with Vice President Ma’ruf Amin, announced the reshuffle for the minister of his ongoing Indonesia Maju cabinet on Tuesday, December 22th 2020. The news of this reshuffle was expected, considering the scandal surrounding a few of Jokowi’s men. Juliari Bahari, former Minister of Social Affairs, was arrested by Komisi Pemberatasan Korupsi (KPK) for allegedly receiving bribes from suppliers of social assistance for the COVID-19 Pandemic was now replaced with Mayor of Surabaya, Mrs. Tri Rismaharani. Aside from Bahari, former Minister of Marine Affairs and Fisheries, Eddhy Prabowo, was also arrested by KPK for allegedly receiving bribes and was replaced with Wahyu Sakti Trenggono. Sandiaga Uno, who was once a formidable candidate against Jokowi and Ma’ruf Amin during the 2019 President Election, is now appointed as the Minister of Tourism and Creative Economy, replacing Wishnutama. One of the heavily discussed individuals this year, Terawan Agus Putranto, who was expected to be dismissed as the Minister of Health, was foreseeably replaced with Budi Gunadi Sadikin. Sadikin used to serve as the Vice Minister of State Owned-Enterprises. Other reshuffles include Yaqut Cholil Quoumas and M. Lutfi who served as the new Minister of Religious Affairs and Minister of Trade. Hopefully, this change in the cabinet would bring prosperity for the Indonesian people.

The news of the reshuffle traveled fast in the capital market world and is believed to be a positive sentiment towards IHSG. We acknowledge that some of the name that Jokowi brings to his office registered as having affiliation with several listed companies on the Indonesia Stock Exchange. For instance, as many people aware, Sandiaga Uno maintains a close relationship with PT Saratoga Investama Sedaya Tbk. (SRTG). Kiwoom Sekuritas Indonesia Analyst, Sukarno Alatas, commented that this reshuffle brings the potential to become a positive catalyst for IHSG, particularly for the tourism sector. While on Tuesday (12/22) he added that, “But for its significant impact, I don’t assume it will affect much because the related sector doesn’t influence enormously on the index.” said Sukarno. He then projected that IHSG has the potential to once again bullish. With the target level to achieve ranging from 6,200 to 6,300. Contrary to Sukarno's statement, on Wednesday (12/23), IHSG was dropped 0.24% to the level of 6,008.7. In point of fact, even though IHSG was closed, after undergoing a hit and also corrected. It had tried to climb up to the green zone two times, noted that this movement was considered “wild” seeing that it had swing three times in both green and red zones.

Some shares, especially shares affiliated with the new members of the cabinet, are directly impacted by the president's late decision. Head of Research at NH Korindo Sekuritas Indonesia, Anggaraksa Arismunandar, mentioned these new names that Jokowi brings to his cabinets were accepted fondly by the market players. "This is mainly because some of these men possess the backgrounds as entrepreneurs, professionals, and one of them being the former heads of the BKPM (Badan Koordinasi Penanaman Modal) who certainly understand the nuts and bolts of investing," added Arismunandar to Bisnis on Tuesday (12/22). Arismunandar also viewed several shares affiliated with Indonesia's new ministers to have potential growth, such as PT Adaro Energy Tbk. (ADRO), PT Merdeka Copper Gold Tbk (MDKA), and PT Tower Bersama Infrastructure Tbk. (TBIG). Shares of PT Saratoga Investama Sedaya Tbk (SRTG) also surged 12% to 3,950 at the closing of trading on Wednesday (12/23). As we know, PT Saratoga Investama Sedaya Tbk is an investment company that 21.51% of its shares are owned by Sandiaga Uno, which is now the current Minister of Tourism and Creative Economy. Arismunandar also reminded that this reshuffle sentiment might be temporary; hence, investors should pay attention to the business prospects and company fundamentals in the long term. In essence, alluding to the state that IHSG suffers because of this reshuffle announcement, it can be said that the late decision still generates uncertainty and ambiguousness in the capital market viewpoint.

Source :


CNBC Indonesia


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