Jakarta stocks could get a bounce in the third quarter if the winner of Indonesia's presidential election achieves a decisive victory margin, ending months of uncertainty, analysts said.
Indonesia's long electoral cycle has combined with expectations of higher US interest rates, surging oil prices and the weaker rupiah currency to hurt stocks in the second quarter.
"It will depend on the outcome of the July 5 election. If there is a clear winner - we're not talking about 51 percent - the outlook is reasonably positive," said Michael Chambers, Jakarta-based head of research at CLSA.
In recent polls, former chief security minister Susilo Bambang Yudhoyono has placed well above four other candidates, although most political analysts say they don't expect he'll get the 50 percent required to win the July 5 vote outright.
If no candidate wins an absolute majority in the first round, the two top candidates will compete in a second round on September 20.
The Jakarta Composite Index closed at a record high of 818.159 points on April 27. Since then, it has fallen about 15 percent, to close on Friday at 692.715, about where it started the year.
Tjandra Lienandjaja, head of Research at GK Goh, forecast the index could hit 750 points during the third quarter if there is a clear-cut winner of the elections. By the end of the year, he said, the index could reach the 850 mark.