Indonesia Stocks Rise on Trade Outlook After Parliamentary Truce

Indonesia’s benchmark stock index gained for the first time in seven days on speculation President Joko Widodo will improve regional trade ties and secure enough support from parliament to push through reforms.

The Jakarta Composite Index rose 1.3 percent to 5,029.94 at the midday break. Auto distributor PT Astra International added 3.4 percent, providing the biggest boost for the benchmark gauge. PT Telekomunikasi Indonesia advanced 2.7 percent, while PT Bank Mandiri, the country’s largest lender by assets, gained 2.2 percent.

Widodo, known as Jokowi, is on a nine-day trip to attend the Asia Pacific Economic Cooperation summit in Beijing, followed by an Asean summit in Myanmar and a Group of 20 meeting in Brisbane, prompting speculation he’ll attract more foreign direct investment to Southeast Asia’s biggest economy. Both camps in the country’s parliament have reached an agreement on the number of seats for leaders of parliamentary commissions, Idrus Marham, secretary general of Golkar, the largest opposition party, said yesterday.

“The truce in parliament is expected to significantly lower the political risk for investors,” Agus Yanuar, president director at PT Samuel Aset Manajemen, said today. “Investors are also hoping that Jokowi will be able to bring investments into the country from his first overseas trip.”

Russia is targeting $5 billion in trade with Southeast Asia’s largest country in 2015, Indonesia’s foreign ministry said in a statement yesterday after discussions between Jokowi and Russian President Vladimir Putin in Beijing. Russia is developing an aluminum smelter in Indonesia valued at about $1 billion, according to the ministry.

Since starting work on Oct. 27, Jokowi’s ministers have promised to cut fuel subsidies and overhaul permits for investors. Jokowi’s biggest test will be in pushing through plans to increase the price of subsidized fuel, Yanuar said. The government plans to raise prices this month, Sofyan Djalil, coordinating minister for economic affairs, said on Nov. 4.

Before it's here, it's on the Bloomberg Terminal.