Market's Negative Reaction Only Temporary: Economist

Jakarta (Antara) - Strong negative reaction of the market on Thursday to Wednesday's result of legislative election would not last long, economists said. The index of the Indonesian Stock Exchange closed 155.68 points or 3.16 percent lower at 4,765.73 points on heavy share sales following election result not up to expectation. Similarly rupiah weakened 0.4 percent to the level of 11,338 per US dollar in the closing trade on Thursday. "We think the correction would not last long. It is a natural reaction," Anton Hendranata, an economist from Bank Danamon said here on Thursday. Anton said the financial market reacted negatively after the quick count showed the Indonesian Democratic Party of Struggle (PDIP) failed to notch up an overwhelming majority of the votes. Many surveys had predicted PDIP would emerge as an overwhelming winner after naming the popular Jakarta Governor Joko Widodo as its presidential candidate. The party succeeded in garnering only around 19 percent of the votes with Golkar Party coming second with around 14.9 percent. The market showed an euphoric reaction when the opposition PDIP named Joko Widodo its presidential candidate. Anton said the market would recover soon as the elections had been peaceful and the presidential elections in July is also expected to be smooth. "Our forecast is that rupiah would regain much of its losses and would reach stability at the level of 11,058 per dollar by the end of the year," he said. In short term, the rupiah may lose more value weakening to the level of 12,500 per dollar on strong demand for dollar in May-June, he said. (*)