A New Indonesian President Has Been Announced: What Shares Should Singaporean Investors Be Looking At?


So it’s finally been decided yesterday. Jakarta’s former Governor Joko Widodo will be the seventh President of Indonesia. In what was an eventful election process, Mr.Widodo managed to win 53% of the Indonesian public’s votes.

It’s an outcome that investors seem to have been hoping for; the Jakarta Stock Exchange Composite Index has already moved up by 5.1% in July alone and is also up by 0.4% as of the time of writing (2:45pm, 23 July 2014). In contrast, the Straits Times Index (SGX: ^STI) here in Singapore has managed only a more modest gain of 2.9% in the same period.

With a new leader at the helm of Indonesia, what does it mean for the country’s economy as a whole? And to cater more specifically to investors, what are some of the shares in Singapore that could possibly be affected by the incoming leader?

Shares in focus

With no overhang on the presidential election issue existing any longer, shares such as Jardine Cycle & Carriage (SGX: C07) have already started rallying; for instance as of the time of writing, the share is up 1.78%, representing the largest daily gain within the Straits Times Index’s 30 constituents. Jardine Cycle & Carriage owns slightly more than 50% of Astra International, the leading automotive company in the country.

Palm oil companies with significant operations in Indonesia such as Wilmar International (SGX: F34) and Golden Agri-Resources (SGX: E5H) – the former’s shares are up 0.3% currently while the latter has slipped by 1.8% – are also in focus as Mr. Widodo will be looking at ways to boost the Indonesian economy going forward.

The palm oil commodity, one of the most important export products for Indonesia (it is the third largest export-earner for the country in 2012), would surely be one of the areas that the government would be looking to improve. Indofood Agri Resources (SGX: 5JS) would be in the thick of it; the company, which supplies one of Indonesia’s most popular palm oil-based cooking oil brands Bimoli,  has a large presence in the country’s palm oil industry and general domestic economy.

Geo Energy Resources (SGX: RE4) is a coal miner based in Kalimantan, Indonesia. Coal was the largest export-earner for Indonesia in 2012; given the importance of coal to the country’s economy, it also seems likely that the new President would be giving some serious thought on how he can help boost the industry.

Foolish Summary

The mandate for Mr. Widodo could perhaps be summarised in two words: Indonesia’s Economy. Home to South East Asia’s largest population, Indonesia, under its new leader, would likely be focusing on economic growth in order to become a major economic power in the region. With the help of Mr. Widodo, Indonesia might be set for renewed interest from investors all over the world.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim owns shares in Wilmar International.