The market clearly favours Jakarta Governor Joko "Jokowi" Widodo (joined by running mate Jusuf Kalla) to become the next Indonesian president, and although Jokowi is still leading the popularity polls investors have become more nervous as there is now more political backing for Subianto than there is for Jokowi.

Market participants are also concerned about financial stability of Southeast Asia's largest economy after the government announced to need an additional USD $6.5 billion to finance fuel subsidies in 2014 and proposed to raise the budget deficit to 2.5 percent of GDP (higher than the initial projection of 1.69 percent of GDP). The country's current account deficit may also widen again in 2014. Last year, the current account deficit hit a record high at USD $9.9 billion (equivalent to 4.4 percent of GDP) in the second quarter and - amid the looming ending of the Federal Reserve's quantitative easing program - led to large capital outflows. Since the second quarter of 2013, the current account has been improving due to the introduction of various fiscal policy packages as well as the sharply depreciated rupiah exchange rate (thus curbing imports while making exports more competitive).

On Friday (23/05), around 3.8 billion Indonesian shares - with a value of roughly USD $426 million - were traded, considerably lower than the daily average of USD $539 million this year. Foreign investors accounted for 37 percent (USD $156 million) of total trading value on Friday, recording a net buy of USD $28.6 million. The mining and basic industry sectors performed best, rising 0.77 percent and 0.63 percent respectively. The miscellaneous industry tumbled 1.01 percent.

On a year-to-date basis, the Jakarta Composite Index gained 16.4 percent in 2014.

Next week will be a short trading week as two public holidays cause the Indonesia Stock Exchange (IDX) to be closed. On Tuesday 27 May 2014, the IDX is closed due to Isra Mi'raj Nabi Muhammad (the ascension of the Islamic Prophet Muhammad), while on Thursday 29 May 2014 the stock exchange is closed for the commemoration of the ascension of Jesus Christ.

Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.39 percent to IDR 11,560 against the US dollar on Friday (23/05).

| Source: Bank Indonesia