JAKARTA (TheInsiderStories)– A week before the presidential election day, the stock market players seemed to be calm and more confident in facing the presidential election results. This can be seen from the Jakarta Composite Index (JCI) which opened higher in trading on Tuesday (04/09).

The JCI was up 8.67 points or 0.15 percent to 6,435 while total trading was recorded at Rp1.11 billion, with a value of Rp447.63 billion (US$31.7 billion). Foreign investors recorded net purchases of Rp7.80 billion in all markets.

Market participants have no longer seen who won caused they rated both candidates have a similar vision. The market’ current concern is that the presidential election is safe.

The JCI rally is predicted to occur after the presidential election. But the increase did not last long. It due to the condition of the domestic and global economy is being sluggish. As a result, despite the euphoria of the presidential election, the JCI quickly consolidated.

Some analysts think there will be positives and negatives effect from the two prospective leaders if one of them is elected. However, security is a major concern for the capital market that will advance positively.

Managing director of equity capital market international Harry Su said, in this condition, investors could react more defensively and take more cash portions waiting for the possibility that what would happen until the voting day was exceeded.

He said, if the incumbent Widodo – Ma’ruf Amin would be re-elected it would not have much effect on the condition of the capital market. There are no significant surprises. But if the opposition Subianto – Sandiaga Salahuddin Uno wins will be considered by many investors as an unexpected result due to changes and uncertainties originating from the new policy.

The initial decline in stock and bond prices could give investors the opportunity to buy in good condition, assuming the new government can make it happen when foreign investors compare the agendas and policies of Widodo and Subianto.

But for those who want to hedge against possible market disruptions that may arise from opposition wins, they can save cash or choose defensive stocks. Investors’ confidence in the results of the presidential election is driven by the fact that both the two carry the same economic policy, pro-investment.

So whoever wins the election, will not change the direction of policy. Reform in the economy is this struggle of the two candidates, and it provides confidence for global investors to invest. Especially with the reduction of the United States-Chinese trade wars, this year’s global investment climate is very promising.

Based on data from the Investment Coordinating Board, the target of investment realization this year reached Rp792.3 trillion, up from 2018 which amounted to Rp721.3 trillion. The investment realization in 2018 only reached 94.3 percent of the target. The target was missed because the realization of foreign investment was below expectations. Foreign capital only reached Rp392.7 trillion or 82.3 percent of the target, while domestic investment amounted to Rp328.6 trillion or 114.3 percent of the target.

With the improvement of the global economic climate and optimism after the election, with various innovative programs and new economic policies, the investment target of 2019 is believed to be achieved. There needs to be a reformation of problems that cannot be resolved by Widodo’ administration: licensing issues, land acquisition, labor and coordination between the central and regional governments.

Without fixing it, Indonesian investment will certainly continue to decline. In fact, this investment issue is indeed important because Indonesia’s trade and payment balance is still a deficit in the amount of Rp1.2 trillion in 2018. So that it also affects Indonesia’s economic growth during the past year which only recorded 5.17 percent.

This condition is one reason the two candidates made the national economic concept as the main selling point. In the incumbent, the vision did not change much, when compared to the 2014 presidential election. While in the opposition, the translation of the vision looks longer, especially through the action programs offered. They make the economic pillar very thick with the nuances of nationalism in it, as the main mission. Unmitigated, there are eight economic pillars offered that will be implemented in 36 action programs.

The concept of a nationalist economy is what makes the opposition assessed by the Economist Intelligence Unit. They predict that if the opposition wins, the government will be nationalistic and challenging for foreign businesses, as well as Indonesian companies with global reach. Policies will turn out to be populist with a tax cut plan. Opposition economic policy prescriptions, they added, can threaten Indonesia’s macroeconomic stability, and its protectionist approach will deter foreign investors.

But this opinion was denied by the institute for development of economics and finance economist Bhima Yudhistira Adinegara. He doubted if the opposition won, the direction of the policy issued would lead to protectionism. He said the promise of reducing imports and also regarding tax cuts was a strategy to attract votes carried out by the opposition. The opposition is also likely to be trapped in an economic policy that is not extreme considering that parliament is controlled by the incumbent.

The same thing was revealed by the center of reform on economics economist Mohammad Faisal. He explained that the policy packages as part of Widodo’s reforms were indeed conceptually good. But the implementation did not go well as planned.

The campaign promises of the opposition camp are almost the same as Widodo promised five years ago. Nevertheless, the implementation of campaign promises that are not necessarily easy to implement. So even if the opposition wins, it is likely to experience the same obstacles and challenges in implementing its campaign promises.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com