02.10.201403:18:26UTC+00Indonesian stocks poised for steepest decline in four months

Indonesian stocks dropped in the trading session with the benchmark index set to experience its steepest decline since May following the weaker rupiah as parliament appointed a speaker from the opposing party of President-elect Joko Widodo.

The Jakarta Composite Index shed 1.8% to 5,046.81, 11:41 am, Jakarta time. The index is headed for its steepest drop since May 30 of this year. The nation’s currency weakened by 0.2% to match the dollar at 12,155 rupiah per one dollar. For the week, the rupiah has declined a total of 1.1%.

Supporter of losing presidential candidate Prabowo Subianto and lawmaker from the Golkar party, Setya Novanto, was appointed as speaker of the house, voted by majority of the parliament in a plenary meeting today. More than half of the seats in the parliament are under the opposing party of current President Joko Widodo. This means that any plans that the Jakarta governor plans to raise may have a difficult time in pushing through especially the plans to stimulate economic growth. For the year, the benchmark stock index has already added a total of 18% in relation with Widodo’s triumph in the presidential race.

Head of research at PT Trimegah Securities, Sebastian Tobing, commented to Bloomberg that investors that it would be only smooth sailing towards prosperity for Indonesia. Tobing adds that the possibility that Jokowi’s administration will be efficient despite the disagreement in the parliament is still at the table however, the market is becoming “jittery.”