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If Prabowo Elected as President..

If we look at the movement of Jakarta Composite Index (JCI) in the last few months, where the index rose sharply on March 14, 2014, when Jokowi officially run for President, and dropped dramatically when Prabowo gain support from Golkar Party, then it is clear that the majority of stock market participants (regardless of personal choice of individual investors) prefer Jokowi as President. However, first you have to realize that the number of investors in the Indonesian stock market was less than 500 thousand people, aka very small compared to the total population of Indonesia, which reaches more than 250 million. So even if all the stock market investors elect Jokowi, then it's not a guarantee that Jokowi will win the election.

And if you take a look around (outside the room of stock market), then you will find out that the supporters of Prabowo are approximately as many as the supporters of Jokowi. I think that the chances of the two candidates to win the election are equal.

The question is, what if the winner is Prabowo?

A few days ago, Deutsche Bank released a survey which concluded that if Prabowo win the presidential election, then the investor will sell 56% of their assets in Indonesia, where the 'assets' are including the company's shares that traded on the Stock Exchange. This means that, if the survey was correct, then the JCI will be dropped on the 10th of July if the quick count results showed that Prabowo - Hatta superior over Jokowi - JK, and the decline may continue in the coming days which the JCI will have difficult times as it had in June - December 2013 ago.


However, I think it is too much if someone thought that the victory of Prabowo would bring an 'end' for the Indonesian stock market. Because in the end, the movement of JCI in the long term, let say five years, is depends on the fundamental performance of the national economy, including the financial performance of listed companies. The JCI might down (just might, you can’t be sure) if Prabowo win the presidential election, and it was due to concerns that his policies will be less favorable for the stock market, especially when quoting his recent statements (Prabowo once said that the stock trading was a gamble). But if it turns out that his policies have a positive impact on the national economy as a whole (not just the stock market), then the effect on the stock market will remain positive. Make no mistake. If JCI rose steadily while the listed companies have declining financial performance and there are lots of unemployment out there, then it was an 'empty' rise, and it is only a matter of time before the stock index will fall apart. But if JCI goes down while the economy goes just fine, then of course it is an excellent opportunity to buy a lot of undervalued stocks.

The problem is of course, we do not know whether Prabowo will be able to bring a better national economy, or at least as good as today (the government of President SBY have arguably been successful in managing the economy in the last ten years). Some of you might argue that Indonesia will have a good time under the leadership of Prabowo, but some may argue otherwise, that Indonesia will enter a period of darkness if the former commander of Indonesian Special Forces elected as President. Which is right? That, we do not know.

However, based on the history of the beloved Republic, if Prabowo cannot meet the people’s expectations of prosperity, etc., then trust me, he will not stay too long in the State Palace.

Because, if you remember, the first President of Indonesia, Sukarno, had successfully maintained his position until more than 20 years, as he was very good in building the nation’s sovereignty, military, etc., even made a good friend with the U.S. President at the time, John F. Kennedy.

And did you know that in 1948 and 1949, Indonesia was led by two President other than Sukarno? They are Syafruddin Prawiranegara and Assa'at. However, because these two figures were ‘nothing' compared to Sukarno, then they are only able to occupy the post of president in a very short time, and also tends to be forgotten in the books of history.

Then in 1967, when Suharto promoted as President, Indonesia entered a new phase of economic development. And it turned out that Suharto successfully maintained its position as the leader of the nation until finally stepped down in 1998. Why? Well of course because for more than 30 years when he was in power, like it or not, he is able to carry out the development and welfare of the people. The critics, activists, and economists may say whatever, but that's a fact. If Suharto was not able to keep the economy for running well, then he will be deposed immediately by the people of Indonesia itself. The proof? Well, when the financial crisis hit the country in 1998 and the government failed to do nothing, he was immediately stepped down as the president, right? If the crisis occurred in the 1980s, for example, then perhaps since the 1980s, the President of Indonesia was not Suharto.

After the era of Suharto, in the period of 1998 - 2004, some figures had occupied the office of President. They are B. J. Habibie, Gus Dur, and Megawati. All the three characters have failed to complete their terms, and it's because of what? Because they were not good enough in carrying out their duties as head of state. That's it! If President Megawati had the same ability like his father (Megawati is a daughter of Sukarno, the first President of Indonesia), she would not lose the 2004 Presidential Election.

Furthermore, President Susilo Bambang Yudhoyono. Regardless of the many weaknesses in his self, yet most of people has satisfied with SBY's performance so he was successfully completed his post until a full of ten years. In his reign, the national economy grew significantly, and even the stock market has developed very well since 2004, including successfully passing through difficult times in 2008. I think in two or three centuries from now, the history will probably forget the names of Habibie, Gus Dur, and Megawati as Presidents of the Republic (because their reigns are too short), but the name of SBY is not likely to be forgotten.

Then what about Prabowo? Well, it is the same. If later his performance did not satisfy the people, then he would only occupy the office for a term of five years or even less, to be replaced by another figure. Unlike the positon of governor, state’s minister, member of the house of representatives and the like, where a movie celebrity could suddenly become a member of the House, the position as a President is sacred where only selected individuals can occupy the office for a long time period.

Thus, although everybody wants to be the President, such as Rhoma Irama, Wiranto, Aburizal Bakrie, Gita Wirjawan, until Farhat Abbas the comedian, but because they did not have the capability for it, then they’re immediately eliminated from the nominations. If from these names only elected two candidates, namely Jokowi and Prabowo, then they are the most capable to be President.

And if later Prabowo (or Jokowi) elected as President but subsequently proved incompetent, then he will not be too long in the office because he will soon be replaced by another candidate.

In conclusion, if you ask me about what would happen on the JCI if Prabowo wins the election, then I would answer that the index may be dropped in the short term. But in the long run, it will depend on how the performance of Prabowo - Hatta on the national economy, and you can not say that the economy will be destroyed even if you are supporting Jokowi, because you do not know about that. Related to whether the stocks of Bakrie will go up if Prabowo wins the election (because Aburizal Bakrie will get the position of 'prime minister'), then it is beyond the concern of mine, because even if Bumi Resources (BUMI) skyrocketted to Rp1,000 per share, I do not care. What is clear that if Prabowo could not control his political friends and subordinates to be at least not corrupt, then it is the people who will punish him, where he will not be too long in occupying the Palace.

Okay, that's all from me. And now, what about your opinion? Or, what if it is Jokowi that elected as President?

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