How's The Effect of Biden's Win Towards Jakarta Composite Index

Oleh: 

Rayhan Fadhila Ahsan (IESP 2018) & Kemal Pasha (IESP 2018)

After the nail-biting presidential election in the US, finally Joe Biden from Democrats as a competitor of the president incumbent Donald J. Trump from Republicans has won the presidential elect. With 290 electoral votes in states made he complied the minimum requirements of 270 electoral votes, continuing with his little victory in Pennsylvania.

A history of presidency of the United States that will never be forgotten for the local citizens and the world as a witness that can project the brighter future in International trade and ending the non-stop trade war with China. Nevertheless, the impact of the capital market around the world, especially Indonesia, has seen positive sentiment from one of the biggest political events in the world.

We have seen the United State presidential election been a spotlight in the world. This happened because the US is the superior nation in the world and the biggest economy as well. The US can easily interfere in political and economical situations in any sector and commodity, especially in military and oil prices.

Even more, the US has the veto at the United Nations amongst the other five countries which can confirm or deny the resolutions made by other countries participating in the general assembly.

The United States is also one of the biggest importer countries in the world so every country who wants to enroll for international trade, especially the goods going to the US must obey several policies including tariff and quota.

This policy can be either easy or hard for the exporter agents according to the president of US personal favor or political favor. In the hindsight, Donald J Trump as the 45th president of the US, has been conducting a protectionism policy for China which is notably as one of the biggest nations to export goods in the world.

In Indonesia cases when Donald Trump is leading the country there have been several key person who have a tight bond with the US president itself, says Hary Tanoe (the chairman of MNC group), and Setya Novanto (the former Indonesia chairman of parliament).

This relationship may only benefit the specific companies, not to the people of Indonesia. Donald Trump serves the Republican party in the United States, while Joe Biden serves Democratic party. These two different parties have their own interest in terms of international trade policy, military budgeting, immigration restriction, domestic taxes policy, and etc.

Joe Biden as the 46th president-elect of the United States has its own interest and the world relies on his movement to bring more decency to the White House. 

Public put high hopes to Joe Biden as a man who can bring luck especially for middle income in the country. Donald Trump trickle down strategy to funding the big firms and tax cuts is a horrible policy decision for the low middle income workers. 

Afterwards, Joe Biden also wanted to join again the Paris Climate agreement which was withdrawn in 2017 by Donald Trump to realize his commitment to building a clean US ecosystem by preparing modern infrastructure that uses environmentally friendly energy. This will lead to a sustainable based company that can bring funds and invest in Indonesia. 

In terms of Jakarta Composite Index (JCI),Joe Biden as the 46th elected president of the United States has his own interests and the world is counting on his move to bring more politeness to the White House. The public has high hopes for Joe Biden as a figure who can bring good luck, especially to middle-income people in Indonesia. 

Donald Trump's trickle-down strategy to fund large corporations and cut taxes is a dire policy decision for lower-middle-income workers. After that, Joe Biden also wants to rejoin the Paris Climate agreement that Donald Trump withdrew in 2017. This will lead to sustainable based companies that can raise funds and invest in Indonesia. 

In terms of the Composite Stock Price Index (JCI), issuers that play a role in nickel-based mining such as ANTM, for example, can become one of the currently recommended stocks, because ANTM is involved in the production of electric car batteries with Pertamina and PLN. This is evident from the response of investors in the capital market which made this stock experience a 10.22% increase in price at the time of Joe Biden's victory announcement. After the electoral college announcement, domestic investors are expected to reinvest and recover from the severe volatility previously caused by the COVID-19 pandemic. 

After the electoral college announcement, domestic investors are expected to reinvest and recover from the severe volatility previously caused by the COVID-19 pandemic. 

The former 47th vice president of the United States, who is also concerned about fighting this epidemic, is not only wearing a mask but also acknowledging the findings of scientists recently. 

After the announcement of electoral colleges, domestic investors hopefully can reinvest and rebound the previous severe volatility due to COVID-19 pandemic. 

This former 47th vice president of the United States, also put a high concern in fighting this epidemic not merely putting a mask on but acknowledged the recent scientists findings. 

For our knowledge, recently there are two of the biggest vaccine companies in the US namely, Pfizer and Moderna which announce their vaccine has an effective rate over 90%. This report can bring hope that by 2021 Indonesia stocks will have an enormous improvement specifically in pharmaceuticals. 

After that this senator from Delaware is likely to fix the diplomatic tension between his country and China. Joe is known for a leader who spent "more times in private meetings" with Chinese leaders, Xi Jinping according to TIMES.  He can propose truce between the trade wars. Therefore, the free-market trade relations can emerge and of course can loosen the rigidity in supply chains around the world.
And for Indonesia, it will be beneficial for the multinational firms who depend on supply chains. It can bring value added goods to be exported and increase the aggregate income for the country. The stocks market will likely overcome the problem about this complicated supply chain market and hopefully will rise again in the first quarter in 2021.

Because this quarter Joe Biden will be sworn in as president and plans to increase fiscal stimulus when he takes office to restore the economy. This stimulus was welcomed by investors on the Indonesia Stock Exchange.

This is evidenced by the increase in JCI for 3 consecutive days on trading November 9 to November 11 at the level of 5,356 - 5,509.51 after the announcement of the Quick Count of the US Presidential Election. Even though at the close of stock trading on November 6, the JCI was still at the level of 5,335.53. 

Because with this policy, it can make the amount of US Dollar money circulating more in the market. This causes the inflation rate to increase, so that the dollar value will weaken further against other currencies such as the rupiah. If this happens, investors will need to diversify their assets into investments other than US dollars, such as stocks.