MARKET REACTION ANALYSIS TO THE EVENT OF PRESIDENTIAL NOMINATION AND ELECTION (A STUDY OF LISTED INDONESIA LQ-45)

• Main Author: Millatina Rizal, Ratu
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/35331
• Institution: Institut Teknologi Bandung

Indonesia is facing a political year and made the investment climate unstable in 2019, one of which is the held of presidential election. Investors are anxious about uncertain market conditions. A political event that contains information for the capital market can affect stock prices. In dealing with this, investors cannot speculate on the future performance of the capital market, because we could not know political decisions such as the results of the presidential election. In an efficient market, the prices formed now will reflect all information in the past, but based on Husnan (1998) in Imelda et al (2014) found that Indonesian stock market is semistrong efficiency one. In the market with semi strong efficient form, the research of stock price changes after the key announcement is refer to as event studies. Event studies are done to the event of the elected of Joko Widodo as a candidate in presidential election 2014,the elected of Joko Widodo as a president in presidential election 2014, and the elected of Joko Widodo as a candidate in presidential election 2019 against abnormal return on stocks listed in LQ-45 index. This research is intended to see whether the market reacts to the events related to Joko Widodo and to see stocks in which sector should be invested to obtain abnormal return if Joko Widodo wins in presidential election 2019 again by paying attention to sector that have the highest investors’ interest at the time of past events related to Joko Widodo. The research samples are stocks listed in LQ-45 index in period of February-July 2014 and in period of February-July 2018 that have met the sampling criteria. This research employs one sample t-testagainst the sample’s average abnormal return as a whole and to the average abnormal return of each sector contained in the sample. According to statistical test, market use informations of each events related with Joko Widodo to obtain abnormal return that is abnormal, this is indicated by the presence of significant abnormal return around each event. In the first and the second event, the property, real estate and building construction sector was the most attractive sectors for investors to obtain abnormal return indicated by this sector is the sector that has the most significant abnormal return followed by positive average abnormal return, but the trend of highest investor interest in this sector does not occur again in the third event. So, investorsstill have to wait and see the further direction of Joko Widodo's policy through the contents of his campaign to find out which sector will benefit if Joko Widodo is re-elected as a president, but based on the campaign delivered by Joko Widodo so far, investor should pay attention to property, real estate and building construction sector again as Jokowi said that he would be consistent in building infrastructure if he wins the presidential election 2019, and investors also should put atention to agriculture sector as now Indonesia has already moved towards B100.