Indonesian stocks have fallen 9.2 percent so far this month amid renewed concern over a trade war between the United States and China. (Antara Photo/Aditya Pradana Putra)

Stock Market Extends Rebound After Prabowo Opts for Court Settlement Over Street Protest

MAY 21, 2019

Jakarta. Indonesia's benchmark stock index continued its rebound on Tuesday from a six-month low after presidential candidate Prabowo Subianto watered down threats of mass action against the result of last month's presidential election and vowed to take the dispute to the Constitutional Court instead.

The Jakarta Composite Index rose 0.7 percent on Tuesday, following a 1.3 percent increase a day earlier. 

"We can see in the past two days, the market started to rebound. I think the decline in [the past weeks] was a little too deep, a bit overshot," Inarno Djajadi, managing director of the Indonesia Stock Exchange (IDX), said on Tuesday, as quoted by Antara news agency.

Indonesian stocks have fallen 9.2 percent so far this month amid renewed concern over a trade war between the United States and China. 

Slowing economic growth and a gaping current-account deficit added more worries for investors, while Prabowo's rejection of the election results and threats of mass protests brought forward fresh questions on the country's political stability. 

But Prabowo said on Tuesday that he would not fight the election result on the streets, and instead take the dispute to the Constitutional Court, after the official tally, announced by the General Elections Commission (KPU) early on Tuesday, showed the incumbent, Joko "Jokowi" Widodo, having received 55.5 percent of the vote.

Many see Prabowo's apparent change of heart as a positive development and hope it will improve sentiment in the market.

"We hope the market can return to normal," Inarno said. 

Daily transactions over the past week fell to between Rp 7 trillion and Rp 9 trillion ($480 million-$620 million) from an average of Rp 10.5 trillion at the beginning of the year, with many foreigners selling their holdings. 

Inarno said he believed the foreigners would return once tensions dissipate. 

"God willing, [I'm] optimistic. Let's pray together that nothing [extraordinary happens]," he said.

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