Stocks peak on peaceful election, Susilo lead

Stocks peak on peaceful election, Susilo lead

Dadan Wijaksana, The Jakarta Post/Jakarta

The Jakarta stock index surged to record levels on Tuesday as
investors were buoyed by the smooth election and the imminent
victory of Susilo Bambang Yudhoyono, seen by many in the market
as more capable than incumbent President Megawati Soekarnoputri
of curing the country's economic ills.

The Jakarta Composite Index reached an all-time high of 829.57
points in the morning session, but late profit-taking meant the
index retreated to close at 824.86, a 1.13 percent increase
compared to Friday's close.

Its previous record high was 818.16 points on April 27.

Although the local stock market had already rallied strongly
during the past week, the non-violent run-off on Monday, the
final round of the country's first-ever direct presidential
election, kept up the bullish sentiment.

Investors were heartened by Susilo's massive lead over
Megawati in the provisional tally.

"With (Susilo) leading with such a huge margin, the result
should at least mean there is less chance of a dispute about
results between the competing parties, which could create jitters
to the market," one dealer at a local brokerage said.

Susilo "represents a new face, a new character with charisma,"
Bloomberg reported, quoting Stephanie Lee, who helps manage US$10
billion in securities at Aberdeen Asset Management in Singapore
and holds more Indonesian stocks than are represented in
benchmark indexes. "He comes across more assertive with regard to
policy-making."

University of Indonesia economist Chatib Basri hoped Susilo
was able to maintain his current momentum and would form a
credible cabinet.

He acknowledged fixing the structural problems, which have
held back economic growth since the late 1997 crisis, could not
be done overnight. However, he said the new government should
give a signal to the market it was determined to fix the
problems.

Susilo is expected to announce key members of his cabinet
prior to the official swearing-in ceremony on Oct. 20. Some
members within Susilo's inner circle have proposed respected
Minister of Finance Boediono to be maintained in the current
post.

Bank Lippo president Joseph Luhukay hailed the peaceful
process of the election and said confidence was now on the rise
in Indonesia's economy.

Blue-chip shares, including telecommunication giants Telkom
and Indosat, and Bank Central Asia, were among the most active
stocks traded.

Despite the positive sentiment, analysts warned of profit-
taking in coming days. They said investors would wait for the
announcement of the new cabinet and early signs of whether the
new government could deliver on its promises to fight corruption,
accelerate key reform programs and encourage economic growth.

Signs of caution were evident on the currency market, where
the rupiah lost ground on earlier gains due to profit-taking.

It hit an 11-month high at Rp 8,930 to the greenback earlier
in the day, but weakened to close at 9,030; the same level as
Friday's close.