You can contact the author (Teguh Hidayat) by email, teguh.idx@gmail.com. The author live in Jakarta, Indonesia.

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Jokowi for President!

Friday March 14, 2013, about 3.00 pm, the Governor of Jakarta, Joko Widodo aka Jokowi, announced to the media that he has been officially run for president, in the 2014 presidential election to be held shortly. Shortly thereafter.. the capital market responded to the news with great enthusiasm! Only one or two minutes after the news announced, the Jakarta Composite Index (JCI) skyrocketed to dramatically gained 3.2 percent! Or the highest during the year of 2014 so far.

Me myself on that Friday afternoon received many telephone, short messages, BBM (you name it) that 'reporting' about the rise of the index, and at first I did not really care about that, just as usual. However, when it was mentioned that Jokowi is officially run for President, frankly I feel excited too.

The dramatic movement of JCI in the final minutes of trading, shortly after the announcement

Because Jokowi is special, and that’s for real. As a citizen of Jakarta, I could feel a lot of positive changes since the duo Jokowi - Ahok officially lead the Capital of Indonesia at the end of 2012, compared to when Jakarta was led by the previous Governor, Fauzi Bowo aka Foke. Most noticeable is a better facility of mass transportation. These days, you can ride the bus of TransJakarta and also minibus of Kopaja, that is faster, convenient, and safe, so you do not need to be stuck in traffic for personal driving. In the era of Foke, public transportation is only for who cannot afford to buy a car. But today, you can find some rich person in the bus, while the bus itself is convenient enough for them.

That’s for public transportation. While for the other aspects of the City of Jakarta, there are also a lot of positive changes since Jokowi assumed his position as the Governor. You can read all of it over the internet.

While as a part of economy, in this case an investor of the stock market, I of course expect a stable national macroeconomic conditions which can only be achieved if this country is managed by the people who could be trusted. Yep, pretty much the same as if you want to invest in shares of a particular company, that company should be managed by a team of management that is honest and trustworthy. The quality and ability of management to manage the company should also be noted, but however, integrity is the most important thing.

And Jokowi is a perfect representation of 'the trustworthy'. If you look at his humble face and his skinny appearance, it is almost impossible to imagine that Jokowi would corrupt in running his Government. Jokowi is also a modest figure who has not even wearing a watch, and always wearing a simple dress shirt.

While the society, including also the entrepreneur (which is able to see the figure of Jokowi from his real ability and integrity, not just a mere personal branding) could see it. Only in less than two years since he became the Governor of Jakarta, various forms of beliefs continued to come, such as donations for TransJakarta buses, garbage trucks, and to help flood victims. You know, in the era of previous governors, the middle and upper class people (entrepreneurs) was unwilling to contribute something to the provincial govenrment, because when they meet face to face with the governor, they will immediately conclude that the governor could not be trusted, where their donations are likely only came into the pocket of governor himself, and also his cronies.

Back again to the matter of macroeconomics. We know that to this day, sixteen years since the fall of Suharto, Indonesia is still managed by a bunch of corrupt politicians that is lack of integrity, yet our economic continued to grow steadily. Indonesia is like a consumer goods company with a bright prospect as it plays in an easy business, so that the performance is excellent but.. not achieving the maximum, because his of its ‘monkey management’.

So if this 'management' is replaced by a general meeting of shareholders (read: Presidential Election), in which the shareholders (read: the people) choosing a new CEO (read: the President) that is far more competent and more trustworthy than the previous director, then what would the impact on the company (read: the Country)?

And as Jokowi is the only presidential candidate that has the attribute of 'trustworthy' as we have discussed above, at least in the eyes of investors, then it was no wonder if the JCI skyrocketed after the announcement of Jokowi’s candidacy. So there are expectations, there is a hope that Indonesia will grow better, especially in terms of economy, if the country is led by a leader with integrity, like Jokowi. And if a country has a better economic condition, then what about the performance of the companies in it? Of course, it would likely be better too.

It's merely an expectation!

However, remember that the cause of the jump of the stock index is due to the expectation that under Jokowi’s leadership, the Indonesian economy will have a better growth and so on, but the Indonesian economy has not improved at all. In fact, there is also no guarantee that Jokowi will successfully led Indonesia to be a better country (in term of economy). And more importantly, please remember that Jokowi has not officially elected as a President! And there is no guarantee that Jokowi would easily win the election. You do not think that the other presidential candidates would give up that easy, do you?

In addition, you cannot say that all the Indonesian people would support Jokowi to be the President of Indonesia, because there are many things that work against him in his next struggle to assume the seat of President, like his uncompleted duties as the Governor of Jakarta, allegations of personal branding and as a 'puppet' of some corporation capitalists, Jokowi’s position that is still overshadowed by the political interests of Megawati and his party, and so on. The point is, once again, Jokowi is not necessarily win the Presidential Election.

So in the end, as already mentioned above, the increase on JCI was only driven by some expectations, and not because the real value of the index itself is actually rising. And based on my investing experience, this kind of euphoria will usually turned down if those expectations evaporated aka forgotten over time, or even worse, those expectations later proved to be a mere expectation, without any circumstances. Remember that JCI can only rise to a certain position, then stay in that position aka not to fall down again, if its new position is supported by fundamental factors, aka the real improvement of financial performance of the listed companies.

But usually, when the index rose significantly for the first time, then it usually will not go down immediately, just as the opposite when the index tumbled of more than 3% in a day, then it would not rebound immediately. So if you are a stock trader, then the opportunity for more gain is probably still open until the next few days.

However, if you are a value investor, then if on last February 25, 2014, I had decided to hold all of my stocks, so for this moment I began to consider to sell out, but of course while continuing to look at the condition of the market. Remember that just because we have had a great portfolio along the first months of 2014, then it does not mean that we will record the same good performance in the next coming months. You still remember what was happening in the year of 2013, do you?

But of course, we will keep an eye on this Jokowi’s thing, so just stay tuned!

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