However, the party of rival candidate Prabowo Subianto, a former special forces general, said it was too early to call the outcome.
Indonesia’s domestic markets were closed on Wednesday. But the rupiah rose 2% in offshore non-deliverable forwards to levels around 11,525 per dollar.
Analysts anticipated big gains in the Jakarta stock markets on Thursday. Stock investors had in any case been cautiously primed for a change of guard and therefore thinking in Southeast Asia’s largest economy.
“We are in for a euphoric market in the next week,” said Fajar Hidayat, a director at CIMB-Principal Asset Management in Jakarta.
“We will start increasing our equity holdings. In the past few months we’ve been on neutral for our equity funds.”
Indonesia’s stock market has risen 2.5% since Friday to its highest since mid-May. In the year to date through Tuesday it has gained nearly 18%.
The rupiah has risen 3% against the dollar since last week in domestic trade and closed on Tuesday at around 11,600 per dollar. Local bonds have rallied, too, despite the threat of an imminent rise in administered fuel prices and in policy rates.
Indonesia’s high-yielding dollar bonds rallied on Wednesday, with bonds due in 2044 trading as much as 2.5 points higher at 118/118.5 cents to a dollar. That took the yield on the 6.75% bonds, issued in January, to 5.5%.
“Indonesia is on fire,” one trader in Singapore said in a note to clients.
Foreign investors, who own almost 80% of the free-floating Indonesian stock market, have been buying, although their investments have slowed to a trickle in the past month.
Data from the stock exchange showed that by Tuesday foreign investors had bought a net Rp46.5trn (US$4bn) so far this year.
Analysts at local brokerage Trimegah Securities said local institutional investors were holding about US$2.9bn in cash after selling out of stocks when the presidential race changed from being marginally in Jokowi’s favour to a tightly fought one. These investors are preparing to re-enter the market, Trimegah said.
Still, how far the Jakarta stock exchange .rallies will depend ultimately on what kind of team Jokowi picks and how he shapes policies and navigates through a divided legislature.
Hidayat said he would pick stocks in the infrastructure sector, which is set to benefit from the big spending plans both candidates had outlined in their campaigns.
“We are looking at construction companies, cement makers and other companies related to the infrastructure sector,” he said.
