Indonesian politicians is gearing up for another election season, infusing the economy with a round of campaign spending and potentially lifting stocks, along with related Indonesia exchange traded funds, by as much as 20%, according to a money manager.
Alvin Pattisahusiwa, chief investment officer of PT Manulife Asset Management, Indonesia’s second-largest asset manager, projects Indonesia’s benchmark can surge by as much as 20% this year as a weak rupiah, which plunged 21% against the U.S. dollar last year, bolsters exports and election spending supports small- and mid-sized companies, Bloomberg.
Political parties usually spend big on advertising and distribute food, consumer staples and t-shirts to supporters before polls, which will increase income for businesses. [Now Some Help for Indonesia ETFs]
“The elections are a positive factor for the market,” Pattisahusiwa said. “With thousands of people campaigning for seats in the parliament, the amount of money they spend to win the vote would be good for the economy and for consumers.”
Michael Tjoajadi, president director of Schroders Indonesia, the country’s largest fund manager, also points to the stimulative effect of election spending in Indonesia but expects a less optimistic growth in the Jakarta Composite Index (JCI) this year, reports Francezka Nangoy for The Jarkata Globe.
“I do expect it to increase by 5 percent to 10 percent this year,” Tjoajadi said, warning against the negative effects of U.S. tapering and slower growth in China. [Risks Still Abound in Indonesia]
Indonesia will hold its legislative election in April and their presidential election in July.