Indonesian markets welcome projected Widodo win

business July 10, 2014 00:00


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JAKARTA - Indonesian stocks rallied to a one-year high Thursday after most unofficial tallies showed Jakarta governor Joko Widodo ahead of ex-general Prabowo Subianto in a closely fought race to lead Southeast Asia's biggest economy.

Both candidates declared victory Wednesday in the tightest and most divisive presidential election since the downfall of dictator Suharto in 1998.
However the polling agencies considered most reliable indicated a Widodo win, and the Jakarta benchmark index surged more than 2.5 per cent at the open.
Stocks eased slightly towards the end of morning trade but remained more than two per cent up and at their highest level since May last year. The rupiah, which has retreated in recent weeks as Prabowo gained ground against Widodo, was up 0.6 per cent at 11,560 to the dollar.
Official results are not expected until July 22.
Investors have been hoping for victory for the Jakarta governor, the first serious presidential contender without deep roots in the Suharto era, seeing him as a potential reformer and clean leader in a graft-ridden country. 
"Joko Widodo looks to have won (the) presidential election in Indonesia, and hopes are high that he will make a fresh start on economic reform," said Gareth Leather from Capital Economics.
Widodo is seen as more likely than Prabowo to embark on much-needed reforms to inject new life into the economy, and as being more welcoming to foreign companies operating in Indonesia.
Prabowo, who was a top general in the Suharto era and has been dogged by allegations of human rights abuses, is seen as less friendly to overseas investors.
His speeches on the campaign trail have been marked by fiercely nationalistic rhetoric and pledges to further squeeze foreign companies operating in Indonesia, which is a member of the Group of 20 economic bloc.
However, despite the initial market euphoria, concerns are also growing about a long period of uncertainty that could unnerve investors.