Trump effect is only temporary

JAKARTA. Sometime after Donald Trump was confirmed as the 45th President of the United States (US), German Justice Minister Heiko Maas directly tweeted at Twitter. "The world will not end, but things will be crazier," he wrote.

Trump victory was beyond the expectations. The world financial market players were more in favor of Hillary Clinton, on the grounds that there will be uncertainty in the financial markets if Trump wins.

As a result, most of the world's stock markets responded negatively over Trump’s victory. The entire stock indexes in Asia yesterday closed in the red zone. The Nikkei 225 index in Japan slumped to 5.36%, while Hang Seng index fell by around 2.16%.

Fortunately, the Jakarta Composite Index (JCI) only slightly decreased. On Wednesday (9/11) JCI slipped by 1.03% to a level of 5,414.3. Foreign investors also just scored a net sell of IDR56.1 billion.

Meanwhile, rupiah spot rate of rupiah slipped by 0.33% to IDR13,127 per US$1. Based on the middle rate of BI (the Central Bank), rupiah even rose slightly by 0.04% to IDR13 084 per US$1.

Head of Research at Yuanta Securities Indonesia Kim Kwie Sjamsudin said that the Trump’s victory has caused uncertainty. However, the impact to the Indonesian stock market is not significant. "The decline in stock index still seems reasonable, compared to the decline that occurred in other countries," Kim told KONTAN, yesterday.

Kim still believes that Indonesia’s stock market be outperform, so that foreign investors, who are now sheltering in safe-haven assets could return to the capital markets.

But, in the short term, investors should remain alert. According to Kim, the stock market volatility will remain high until Trump announces clear economic policy. "Volatility is more likely to happen in the shares that have export orientation to the US," he added.

Analyst at Recapital Securities Liga Maradona also predicts that JCI still tends to be depressed during this week. Market players are still waiting for Uncle Sam's economic policy, particularly those related to changes in The Fed’s interest rate. "Trump tends to dislike higher interest rate," said Liga. Whereas, most of the market players already believed that The Fed funds rate will rise in December 2016.

Liga is optimistic that JCI will still safe at the level of above 5,100 and still be closed at the level of 5,500 at the end of the year. These predictions have included The Fed’s plan to raise interest rates.

Kim is also optimistic that the stock market will still move as expected and may be closed at the level of 5,500 at the end of the year. According to him, investors can actually take advantage of the stock price correction to start buying domestic trade oriented stocks, such as property and construction stocks.