Indonesian stocks and the rupiah exchange rate showed great volatility on Tuesday’s trading day (22/07). In the first part of the day the benchmark stock index of Indonesia (known as Jakarta Composite Index of IHSG) and rupiah strengthened on speculation that market favourite Joko “Jokowi” Widodo would win the presidential election without riots or other incidents that could trigger political uncertainties. On Tuesday evening, the General Elections Commission (KPU) indeed officially declared Jokowi the winner of the election.
However, in the second half of the trading day, sentiments changed after rival presidential candidate Prabowo Subianto announced to withdraw from the vote-counting process claiming that there have been incidences of fraud in thousands of polling stations across Indonesia. He also stated to challenge the outcome of the KPU in the country’s Constitutional Court. After this news, markets tumbled as investors were concerned about the developments and thus engaged in profit taking. The IHSG was down over two percent shortly after 15:00 pm local Jakarta time. However, when news spread that the Subianto camp is tormented by division and disunity, markets recovered although were unable to return back to the green zone. An example of disunity was when Subianto’s running mate Hatta Rajasa was reported saying that he would accept the result of the KPU.
The Jakarta Composite Index eventually fell 0.85 percent to 5,083.52 points.
| Source: Bank Indonesia
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 0.39 percent to IDR 11,531 per US dollar on Tuesday (22/07).