TEMPO.CO, Jakarta - John Rachmat, head of equity research at Mandiri Sekuritas, said there are three possible scenarios that could play-out in Indonesia's capital market following the result of this year's election. Each scenario has its own storyline of how each presidential candidate will impact the economy should he is elected.

The first scenario has it that if candidate A gets elected, there will be a positive impact on stock indices. This is called the bull case scenario.

"I will not name names—it would be unethical. But the effect [of his candidacy] has been felt since last week following the announcement," he said yesterday.

The person who declared his run for the presidential bid last week was Jakarta Governor Joko Widodo.

The bull case scenario is expected to propel the Jakarta Composite Index (JCI) to penetrate the 5,550 level. BI rate is expected to grow seven percent per year, while the economy is projected to grow by six percent. Consumption rate is pegged at 5.5 percent while government consumption is projected at three percent and investment spending estimated at eight percent.

"If said candidate is actually elected, the exchange rate could be at Rp10,500 per US dollar," John said.

After the Indonesian Democratic Party of Struggle (PDIP) named Joko Widodo as its presidential candidate on Friday, the JCI skyrocketed by 200 points to 4,878. The huge gain is astonishing considering that, just hours before the announcement, the index was moving within the range of 4,600.

The second scenario is the bear case, i.e. if candidate C is elected. Again, without mentioning names, John said that "candidate C is a protectionist; the main competitor of candidate A."

This scenario, according to John, is the worst. If candidate C is elected, the index could expected to plunge to as low as 4,000. BI rate is estimated at 8.5 percent per year, with the economic growth falling to 5.3 percent. Private consumption is projected at 4.9 percent, while government consumption is pegged at 4.4 percent.

"Investment spending growth will only reach 4.4 percent, with the exchange rate corrected to Rp13,500 per US dollar per month," said John. He said that candidate C is considered as not market- friendly. "Because [he is a] protectionist, there will be no flow of foreign direct investment."

John called the last scenario the base case. This scenario, he said, will happen if candidate A receives fierce competition from candidate B.

"Candidate B could be someone from be from the coalition--outside of candidates A and B," John said.

With the base case, the index is projected to be around 4,550, the BI rate at 7.75 percent per year and the economic growth at 5.6 percent. Meanwhile, private consumption would be at 5.1 percent, government consumption at 4.0 percent, investment spending estimated at 3.5 percent and the rupiah predicted at around Rp11,400 per US dollar.

Brief Euphoria

Satria Utomo, head of research at Universal Broker Indonesia, said that the Jokowi euphoria will not last all the way through the legislative elections. "The Jokowi sentiment is estimated to last for two to three days only. The longest would probably be around two to three weeks," he told Tempo yesterday.

Meanwhile, Head of research at Recapital Securities, Agustini Hamid, said that analyses correlating the market's movements with a specific presidential candidate are hyperbolic. Agustini said there is no direct correlation.

"It is only a brief euphoria. There is no direct impact to the stock market," she said.

Agustini said the stock index gain is mainly supported by strong domestic economic fundamentals and the positive performances of issuers; both considered as the main reasons for market participants to buy shares. "Investors are only concerned about economic fundamentals and issuers," she said.

FAIZ NASHRILLAH | GALVAN YUDISTIRA