Investors hopeful but cautious about Indonesia election

Investors hopeful but cautious about Indonesia election
The popular Jakarta Governor Joko Widodo during a campaign at a football field in Jakarta.

Traffic along Jakarta's main streets has become worse in recent months.

Still, when the man responsible for managing the Indonesian capital was named a presidential candidate on March 14, the stock market rallied to its largest one-day gain in six months.

Residents are willing to forgive the gridlock, observers note, because it is due to construction of an MRT system that finally got off the ground last year after numerous delays.

And investors appear equally hopeful that despite the short-term uncertainty of an election year, a change of national leadership will lead to more decisive improvements to infrastructure across the archipelago.

"One can be cynical about elections, believing that no matter who wins, little will change," Mr Wuddy Warsono, country head for Indonesia at brokerage and investment bank CLSA, told The Straits Times.

"On this occasion though, the market seems to think that Jokowi can make a great deal of difference," he added, referring to Mr Joko Widodo, the Indonesian Democratic Party - Struggle's (PDI-P's) presidential candidate and the front runner in recent opinion polls. President Susilo Bambang Yudhoyono cannot stand again by law, and his outgoing administration has come under criticism for failing on the reform front.

Mr Anton Gunawan, chief economist at Bank Danamon, said there is more at work in the stock market rally and the improving economy than just the "Jokowi effect".

Recent improvements in the current account deficit have helped, he said.

However, he added, political factors are also at work.

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