Muhamad Al Azhari, Jakarta – Indonesian stocks and the rupiah fell on Tuesday after presidential candidate Prabowo Subianto withdrew from the electoral process and told supporters to leave as monitors from the ballot count, raising concern that political tensions will escalate.
The Jakarta Composite Index lost 0.9 percent to 5,083.52 at the 4 p.m. close. The rupiah was down 0.6 percent against the dollar to 11,606, after being as high as 11,503 earlier in the day.
"The market is worried of any possible political instability. I am assuming the Prabowo camp will take this to the MK [Constitutional Court]. The ball is now in the MK. If the court rejects the appeal by Prabowo camp, I think it [the stock market] will rebound," said Fauzi Ichsan, senior economist at Standard Chartered in Jakarta. "But clearly, what happened today was not good. The rupiah will also get hurt," he said.
The General Elections Commission (KPU) is scheduled to announce the winning candidate from the July 9 presidential election. A majority of unofficial counts shows that Jakarta Governor Joko Widodo is leading Prabowo, a former Army general. Prabowo can contest the KPU's election results, which would be taken up by the Constitutional Court for a final decision.
"We are going to use our political rights and we are rejecting this presidential election, which is legally flawed," Prabowo said in a televised speech from his campaign base in East Jakarta. "We are withdrawing ourselves from the election."
The JCI lost as much as 2.2 percent in afternoon trading as Prabowo made his remarks. Declining stocks outnumbered advancers 243 to 70 on the Indonesia Stock Exchange. Bank Rakyat Indonesia, Telekomunikasi Indonesia and Bank Mandiri were among the biggest losers in the benchmark stock measure.