Indonesia’s benchmark stock index entered a bull market as Jakarta Governor Joko Widodo’s nomination as a presidential candidate sparked the biggest one-day rally in almost six months.
The Jakarta Composite Index surged 3.2 percent to 4,878.64 at the close, extending its advance from an Aug. 27 low to 23 percent. That’s above the 20 percent level that marks the common definition of a bull market. The MSCI Asia Pacific Index lost 1.8 percent.
A Widodo administration would probably boost spending on infrastructure and public welfare, CIMB Group Holdings Bhd wrote in a report last month. Indonesian shares have rallied this year as an acceleration in Southeast Asia’s largest economy, improving corporate earnings growth and the prospect of increased spending before national elections that start next month lure international investors. Foreign funds have poured $1.01 billion into the nation’s stocks so far in 2014.
“The stock market is reacting to news of his nomination,” Joshua Tanja, the head of research at PT UBS Securities Indonesia, said by phone. “If he wins, I expect this could be good for infrastructure and health-care industries.”
Indonesia will hold parliamentary elections in April and a presidential poll in July to replace President Susilo Bambang Yudhoyono, whose final term ends this year. Political parties typically boost advertising spending while distributing food, consumer staples and t-shirts to supporters before polls.
Indonesia’s economy expanded 5.72 percent from a year earlier in the three months ended Dec. 31, compared with 5.63 percent the previous quarter.