Seeking Opportunities in Politician Issuers' Shares

Reporter: Dikky Setiawan, Yuliana Hema | Editor: Tiyas Septiana

STOCK PERFORMANCE -  JAKARTA. The Indonesian people will hold a five-year General Election (Pemilu) in less than a year. As scheduled, the legislative and presidential elections will be held simultaneously on February 14, 2024.

Historically, election sentiment has stimulated domestic stock market movements. In this situation, people's purchasing power is usually lifted. Especially consumption spending, telecommunications, and advertising.

Director of Anugerah Mega Investama, Hans Kwee, assessed that the election will be a booster for the stock market movement, which is reflected in the movement of the Indonesian Composite Index (IHSG). As an illustration, in the 2019 election, the IHSG strengthened by 1.64%.

Meanwhile, in the 2014 elections, the IHSG rate jumped higher by 21.71% throughout the year. Along with that, the performance and stock movements of a number of issuers on the Indonesia Stock Exchange (BEI) are projected to be affected by election sentiment. Moreover, several companies listed on the BEI are affiliated with political parties.

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Call it, stock-related Sandiaga Uno. The entrepreneur, who is currently the Tourism and Creative Economy Minister, is a former Gerindra politician and will soon join the PPP.

Currently, Sandiaga is affiliated with at least eight stock exchange issuers. Sandi holds shares in these issuers through his business vehicle, PT Saratoga Investama Sedaya Tbk (SRTG).

Apart from Sandi Uno, there are also compatriots in the Indonesia Onward cabinet who are affiliated with BEI issuers. Namely, Erick Thohir, State-Owned Enterprises Minister. Erick is the owner of the media companies PT Mahaka Radio Integra Tbk (MARI) and PT Mahaka Media Tbk (ABBA).

Another politician who controls the shares of a number of listed companies is Hary Tanoesoedibjo, Chairman of the Indonesian Unity Party (Perindo). The MNC Group boss has brought 10 of his companies under the MNC Group to the IDX (see table).

Driving sentiment

Hans Kwee notes that politicians' stocks are usually affected by election sentiment. "Shares of issuers owned by politicians can move positively. Especially if his party is expected to win the legislative or presidential election," Hans said to Kontan on Thursday (5/25).

Capital Market Observer and Founder of the WH Project, William Hartanto, also assessed that the political year could encourage the movement of the issuers' shares of politicians. He gave an example: when Erick Thohir was appointed as State-Owned Minister, the issuer shares that were affiliated with the Chairman of the Indonesian Football Association (PSSI) shot up. Throughout 2019, ABBA shares soared 10.53%.

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However, the Director of Avere Investama, Teguh Hidayat, assessed that in the 2024 election, there will be no strong candidate among the politicians who are also businessmen, so the movement of politicians' shares does not have much effect. "Unless the conglomerate concerned is very prominent, mentioned as a presidential candidate, or so on, then there will be an impact on stocks. If it is just a minister, there is no impact on the issuer's shares," he said.

Nafan Aji Gusta, Mirae Asset Sekuritas Senior Investment Information, also assessed that the shares of issuers affiliated with politicians will be positively responded to by market participants if their political track record is quite good. "For example, the politician is pro-poverty alleviation, pro-job creation, and so on," explained Nafan.

In addition, investors will continue to look at the fundamental performance of political issuers. This condition will also encourage the issuer's stock rate.

Unfortunately, most of the politicians' issuer shares are still moving in the red zone throughout this current year. So, investors are advised to actively watch the politician's political movements.

William added that while taking advantage of the momentum, investors also need to realize that political momentum is only temporary. If political issues subside, the affected stocks will be sluggish. What is important is that investors understand that the momentum is currently political. If politics does not heat up, there is a chance that the shares of issuers of politicians will end the trend," he said.