SE Asia Stocks-Indonesia shares down over 3 pct on election disappointment

Thu Apr 10, 2014 2:38am EDT

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April 10 (Reuters) - Indonesian stocks fell over 3 percent
on Thursday after parliamentary election results signalled
possible formation of a weak government that will have limited
ability to push for reforms needed to boost investments in the
Southeast Asia's largest economy.
    Early counts by pollsters showed the main opposition
Indonesian Democratic Party-Struggle (PDI-P) failed to win
enough votes to nominate popular Jakarta governor Joko "Jokowi"
Widodo for the powerful presidency. 
    Investor enthusiasm for Indonesia had been on the rise on
the belief that Jokowi might even win enough votes to avoid
having to go to a run-off in three months time.
    Jakarta Composite Index was down 3.2 percent at
4,764.66 by midday, its worst performance in a day since Aug.
27, 2013.
    Investors have expected PDI-P to secure adequate vote to
nominate Jokowi to the July presidential polls and disappointing
outcome could raise concern that the country could run into a
period of political confusion.   
    The fall was across the board, led by financials with Bank
Mandiri and Bank Rakyat Indonesia falling
5.6 percent and 4.9 percent, respectively. 
    Bank Mandiri and Bank Rakyat Indonesia have jumped 10.2
percent and 9.1 percent since March 14 after the opposition
announced Jakowi's candidacy. 
    "With larger-than-expected coalition required by PDI-P, we
see possible formation of a weak government with limited ability
to push through necessary reforms and policies ahead," said
Jakarta-based Harry Su, head of research of Bahana Securities. 
    Su in a note advised investors to take profit on sectors
which have appreciated the most like infrastructure, property
and banks in the lead up to the parliamentary elections, with
plenty of political uncertainty ahead. 
    "Nevertheless, with plenty of election spending/money
politics, we expect domestic consumption to be well supported.
With that said, we advise investors to rotate into consumer
staples and telcos, which should outperform in a potential
market correction ahead due to their defensive nature."
    The Indonesian rupiah, the best performing Asian
currency so far this year, also fell 0.6 percent to 11,350 per
dollar as of 0445 GMT as foreign and local banks took profits
after the poll results.
    Other Southeast Asian markets were range bounded as positive
sentiment on the minutes of the Federal Reserve's latest policy
meeting that suggested the Fed may be more cautious towards
raising interest rates than markets had thought was offset by an
unexpected fall in Chinese exports in March.
    Thailand was up 0.3 percent and the Philippines
 traded 0.6 percent firmer, while Singapore and
Vietnam were down 0.4 percent and 0.2 percent
respectively. 
        
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 SOUTHEAST ASIAN STOCK MARKETS    
 Change at 0552 GMT
 Market             Current     Prev Close    Pct Move
 TR SE Asia Index*   416.80        418.94       +0.51
 Singapore          3198.64       3209.92       -0.35
 Kuala Lumpur       1856.48       1855.75       +0.04
 Bangkok            1386.58       1382.02       +0.33
 Jakarta            4764.66       4921.40       -3.18 
 Manila             6629.29       6587.49       +0.63
 Ho Chi Minh         602.04        603.25       -0.20
 
 (Reporting by Shihar Aneez in Colombo and Viparat Jantraprap in
Bangkok; Editing by Anand Basu)
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