SINGAPORE, April 10 Indonesian shares fell 3 percent on Thursday after the main opposition party failed to win enough votes in parliamentary elections to nominate hugely popular Jakarta governor Joko Widodo for the presidency without the help of other parties.
The Jakarta stock exchange sharply underperformed MSCI's broadest index of Asia-Pacific shares outside Japan , which was 0.3 percent higher.
Popularly known as "Jokowi", the governor of Jakarta had been regarded as clear favourite to win when the country votes for a new president in three months time.
The prospect had helped lift both the Indonesian currency and shares, but early counting after Wednesday's parliamentary vote suggested that his Indonesian Democratic Party-Struggle will have to cut a deal with other parties to clear a required threshhold in order to contest the July poll.
CIMB said the result so far may extend the presidential elections to two rounds and prolong the political uncertainty in Southeast Asia's largest economy until the fourth quarter of 2014.
"We view this as a disappointment as the rally prior to the election suggested that more people were betting on subsiding political uncertainty. We expect the rally to pause and the market to see some profit-taking," CIMB said.
It added that sectors perceived to benefit from Jokowi's potential policies -- infrastructure, healthcare and housing -- may see more downside for now.
CIMB's top defensive picks are toll road operator Jasa Marga , state gas utility firm Perusahaan Gas Negara and telecommunication services provider Telekomunikasi Indonesia. (Reporting by Eveline Danubrata; Editing by Simon Cameron-Moore)