After waiting so long, on April 9th, Indonesian people finally held the
legislative elections, and as usual the results can be known shortly afterwards.
Based on data from the quick count, there are three winning parties of this
election, ie PDI-P, Golkar, and Gerindra. The cadres of the losing
party would say that this is just the result of the quick count, and that we
have to wait for the official count from the Commission of Election (Komisi Pemilihan
Umum/KPU). However, based on the experience of previous elections (including local
elections), the results of quick count will not differ much than the results of
official count, in which the top three above is not likely to change.
For stock market investors, they might not pay attention to which party that
wins the election. However, from the results of this election then we can guess
about who will be the President of the Republic of Indonesia. Because, based on
the rules of the Constitutional Court, a party may send its own cadre to run
for President only if it got votes of at least 25% in the legislative election,
and/or 20% of seats in the House. If these requirements are not met, then the
party in question should form a coalition with other parties so their votes would
pass the quota of 25%.
Then, based on the results of the quick count from Indonesian Survey Circle
(Lingkaran Survei Indonesia/LSI), the top three parties are PDI-P with 19.7% of
the vote, Golkar with 15.0%, and Gerindra with 11.8%. This means that, although
the above three parties must seek support from other parties to fulfill the
percentage of votes in order to prepare their cadre (or chairman) to run for
President, but the candidates are clearly only three, and they are Joko Widodo
(Jokowi), Aburizal Bakrie (ARB), and Prabowo Subianto.
Well, the question is, which candidates that would favor the market? To
discuss the issue, maybe we can start from the profile of each candidate, of
course, seen from the points that has correlations with the
Indonesian stock market.
Joko Widodo (Jokowi)
Jokowi is not a stock market guy, but was only a regular furniture businessman
before then turning to politics in 2005 as a Mayor of Solo/Surakarta, Central
Java. As a mayor, Jokowi successfully brought Solo into an orderly town and
even drew international attention because he was the only mayor in Indonesia,
which could discipline street vendors without violence, not including other
achievements. Thanks to these achievements, in 2010 Jokowi re-elected as Mayor
of Solo with the 90.1% percentage of votes, which become a record to date.
In his second period as Mayor of Solo, Jokowi continued his work just as
good as before, and he started gaining national (and even international)
attentions. In 2012, he was nominated as Governor of Jakarta, and he successfully
get rid of the incumbent, Fauzi Bowo. Then in just over one and a half years as
governor, Jokowi once again successfully brought a positive change for the City
of Jakarta, and his increasing popularity becomes unstoppable. In early 2014,
precisely in March, Jokowi nominated as the President of the Republic of
Indonesia, and is practically become the strongest candidate among other presidential
candidates.
Compared with the other two presidential candidates, Jokowi is very popular
in the eyes of many people, and it's not because he has real achievements in
the field of government (in his capacity as mayor and governor), but because he
was described as a honest and humble leader in the midst of a bunch of corrupt
politicians. Foreign media were immediately see Jokowi as ‘The actual leaders of
Indonesian people', may similarly to Aung San Suu Kyi in Burma, South Africa's
Nelson Mandela, or Mahatma Gandhi in India. And Indonesia will be able to
advance in both economic and other fields, only if its leader is trustworthy,
is not it?
In addition to his humble attitude, Jokowi is also very quick in executing
infrastructure development in Jakarta. Including the construction of Mass Rapid
Transit (MRT) in Jakarta, which was previously only a discourse, is directly in
progress when Jokowi became its supervisor, and this is of course addressed
positively by investors - both local and foreign, who intend to invest in the
country, because all this time, the biggest problem of Indonesia lies in the lack
of infrastructure. There is great hope that if Jokowi become President, then
the development of infrastructure in Indonesia will be done more quickly. And
if it is realized, then it means that Indonesia will have a better economic
growth. Including Jakarta Composite Index (JCI), which was already running
pretty fast during the administration of President Susilo Bambang Yudhoyono
(2004 - 2014), also will rise even higher.
In essence, if Jokowi elected as President, then it would give a positive
impact on the market, because Jokowi offers two things at once, namely
integrity, which is reflected in the form of honesty and modesty, and
commitment in building the country, which is reflected in his hard work to
build the infrastructure. You know, it’s not easy to find a state official that
is not corrupt, let alone willing to work real hard for people.
Aburizal Bakrie (ARB)
In contrast to Jokowi, ARB is a high-profile businessman that is certainly
familiar with the world of the stock market, where he is the owner of one of
the largest conglomerates in Indonesia: the Bakrie Group. Unfortunately, since
he entered politics in 2004, he had no achievements, or he had but are not
visible. Also, in his each political campaign, it was not clear of what he has
to offer to the people if he is elected as the President, except normative
things such as employment, the provision of capital for small businesses, a
better education and health, etc.
But on the other hand, ARB’ track record as the businessman is fairly bad.
By not ignoring the existence of other people in the Bakrie Group, he is the
most responsible person for the losses suffered by the investors who hold the shares
of Bakrie Group. In 2008, ARB also 'kicked' one of the most popular person in
the stock market, Sri Mulyani (who served as the Minister of Finance), just
because she revoked the trading suspension of Bumi Resources (BUMI) when it is
down. And a variety of cases such as Lapindo, tax evasions, until Bakrie Life,
helped complete such 'achievements'.
The point is, if ARB is elected as president, then the market will likely to
respond negatively. We don’t know about his track record as a politician, but
in the stock market, he is clearly one of the 'bad guys'.
Prabowo Subianto
Prabowo is the only candidate who has a military background, but he is also
a businessman. Compared to Jokowi, he does not have a clear achievements in
Government, but compared to the ARB, he offers something ‘tangible’ for the
people if he is elected as the President, namely: Making Indonesia as the Tiger
of Asia, with a detailed development programs and a long term vision to restore
the glory of Indonesia, just like the era of President Soeharto. Yep, though
not entirely successful, however, Prabowo has assured the public that he has
similar figure to Soeharto, which also his father in law, both in terms of
firmness and integrity.
Unfortunately, although some of Indonesian citizens quite like him, but
foreign investors do not like this former commander of Indonesian Special
Forces, because it was feared that he would bring Indonesia back to the days of
'dictatorship', where the presence of foreigners in Indonesia will be complicated.
Leading news companies like the NYTimes had write negative articles against Prabowo,
and some superpower like the United States are also clearly does not like him.
This means that if Prabowo gaining the seat of President, then foreign investors
will probably getting out from Indonesia, including from the stock market.
In the open, in one of his political speeches, Prabowo also had criticized
the government who prefers to take care the stock market rather than the keeping
the low price of food and education for grassroot people. I don’t know, but I
think if later Prabowo elected as President, then although Jakarta Composite Index
(JCI) fell down to 2,500, he would probably not take any action. It must be
admitted that during the administration of President Susilo Bambang Yudhoyono,
the government had gave enough care to the stock market, where the finance
minister and other relevant officials would move quickly every time the index
fell, including at the event of 2008 crisis. But at the time of Prabowo later,
the stock market may not be privileged again.
In conclusion, if later Prabowo was elected as president then the market is
likely to respond negatively, though it may be a little better if it was ARB
that elected, because at least Prabowo never playing with junk stocks like
Bakrie does.
Epilogue
Based on the description above, as a stock investor you may hoping that
Jokowi will win the presidential election in September. And fortunately when
compared with the other candidates, Jokowi indeed the strongest candidate, besides
his party, PDI-P, also successfully won the legislative election.
However, there is no guarantee that Jokowi will win, because ARB and
Prabowo is also not without opportunities. Jokowi also have to choose a running
mate (for vice president) from another party (outside the PDI-P), because PDI-P
only has votes of less than 20%. The problem is, if it turns out that the vice
president is a figure that is not appreciated by the public, then it will also
lower the electability of Jokowi. The situation would be different if PDI-P had
successfully achieved significant votes, so Jokowi becomes free to select his
own vice president, including popular figures like Sri Mulyani, Anies Baswedan, or Dahlan Iskan. But unfortunately it is almost impossible to happen
because PDI-P must form a coalition with other parties.
And maybe that’s why the market was 'disappointed', where the JCI tumbled more
than 3% on Thursday, April 10, 2014. Because, what would happen if Jokowi took Rhoma Irama, for example? Make no
mistake, the dangdut legend also has the chance! Because his party, the
National Awakening Party (Partai Kebangkitan Bangsa/PKB), has successfully
occupied the fifth position in the last election.
The point once again, there is no guarantee that Jokowi will win in the
presidential election, and that's why the market can moving very volatile until
next September, in which every political event that strengthens the position of
Jokowi will be responded positively by investors, and vice versa, every political
event that weakens the position of Jokowi will be responded negatively. Today
the market may be dropped, but if later there is an event that is good for
Jokowi’s nomination as President, then investors will buy the stocks, and JCI
will fly once again. But if the opposite happens then of course, JCI will
dropped further. We never know. So instead of trying to figure out whether
Jokowi will win or lose in the next presidential election, we should focus on
the value of the index itself. At the end, the position of JCI at this time was
a bit overvalue anyway.
Okay, that's all from me. So what do you think?
No comments:
Post a Comment