The Jakarta Composite surged to a fresh 15-month high Friday morning after Joko Widodo was confirmed as president of the world’s third-largest democracy.
Stocks powered to a high of 5223.975 in early trade before falling slightly, while the rupiah strengthened 0.3 percent to 11,662 rupiahs per U.S. dollar after Indonesia’s highest court upheld the July election result on Thursday. The result was in question after losing candidate Prabowo Subianto claimed that Joko Widodo – commonly known as Jokowi– cheated.
Whether or not upward momentum continues depends on Jokowi’s ability to push through promised reforms, according to Seng Wun Soon, regional economist at CIMB bank.
“A lot of the optimism and euphoria about Jokowi’s victory has already been priced in to the market,” said Soon.
Indonesian stocks are up 22 percent year-to-date, while the rupiah has rallied around 4 percent against the dollar.
“Going forward valuations are not as attractive…I would be a bit cautious… and now it’s about markets keeping a close eye on Jokowi and making sure he delivers on other measures like reforms and other things that will boost the economy,” added Soon.
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