Indonesia ETF declines on unexpected parliamentary election results

Otmane El Rhazi, Thursday, April 10: The iShares MSCI Indonesia ETF (NYSEArca:EIDO), Indonesia’s biggest exchange traded fund, has declined over five percent in the past two days after early results of the parliamentary election showed the opposition party, favoured by investors, didn’t receive enough support to run for the presidency without forming a coalition. EIDO yesterday closed $1.01 or 3.55 percent lower at $27.43.

According to estimates from the Lingkaran Survei Indonesia, Joko Widodo’s Indonesian Democratic Party of Struggle (PDI-P) won 19.7 percent of the vote, below the 25 percent threshold needed to nominate a presidential candidate. Widodo is favoured by investors, who believe that an administration run by him would boost spending on infrastructure and public welfare (Indonesian ETFs rally following Joko Widodo’s presidential nomination).“The market will be disappointed [by the results],” Harry Su, head of research at PT Bahana Securities, said as quoted by Bloomberg. “We would recommend clients to take profit.”

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