* Incumbent Jakarta governor lost by big margin to rival
* Winner Baswedan's policies include affordable housing
* Poll outcome shouldn't significantly stall national reform
* Market seen remaining strong if there are no security
By Eveline Danubrata and Fransiska Nangoy
JAKARTA, April 19 Investors in Indonesian
markets are likely to return to fundamentals such as corporate
earnings, as the political uncertainties surrounding the
divisive Jakarta election diminish, business groups and analysts
Former education minister Anies Baswedan beat his rival,
incumbent Basuki Tjahaja Purnama, by a huge margin on Wednesday
- a surprising result as most opinion polls had previously
pointed to a dead heat between the two candidates.
During his months-long campaign, Baswedan had proposed
policies including a "zero downpayment" for home buyers, which
he said would be targeted at lower-income groups.
There were also fears he would implement Islamic sharia
regulations in the Indonesian capital, which he denied.
Baswedan "would likely play it safe rather than bring
drastic changes," said Taye Shim, head of research at
Jakarta-based brokerage Mirae Asset Sekuritas.
"It's too risky for him to significantly alter Jakarta's
growth trajectory," he added.
Jakarta, a city of more than 10 million people, accounts for
over 15 percent of national economic output and is home to major
construction projects, including a $5 billion Chinese-backed
rail line connecting the capital to the West Java city of
NO SECURITY ISSUES
Some businesses had favoured Purnama for his perceived
ability to execute key infrastructure projects, but analysts say
his defeat may not necessarily undermine President Joko Widodo's
goal to build roads, ports and power plants.
"As long as there are no security issues, the election
outcome should not significantly stall the reform programme of
the national government, in our view," Citigroup said in a note.
It maintained its year-end target of 6,150 points for the
Jakarta stock exchange, which represents an 8 percent
Baswedan's running mate, private equity tycoon Sandiaga Uno,
told foreign reporters last week his team would continue most of
the central government's infrastructure projects that were
under way in Jakarta.
Harry Su, head of research at Bahana Securities, said that
while financial traders may have a negative "knee-jerk reaction"
to Purnama's loss, their attention should eventually return to
the market fundamentals.
"If there's any overly negative market reaction, we should
buy on weakness because of the solid earnings that we are
expecting from Indonesian corporations going forward," Su said.
The Indonesian rupiah weakened slightly after unofficial
results were announced. The 7-day rupiah non-deliverable forward
traded 0.4 percent weaker against the dollar by
0816 GMT. The 3-month NDF traded 0.25 percent
lower in offshore markets.
The local stock market was closed on Wednesday for the
(Reporting by Eveline Danubrata and Fransiska Nangoy;
Additional reporting by Cindy Silviana and Gayatri Suroyo;
Editing by Bill Tarrant)