Indonesian stocks rallied to a one-year high Thursday after most unofficial tallies showed Jakarta governor Joko Widodo ahead of ex-general Prabowo Subianto in a closely fought race to lead Southeast Asia's biggest economy.
Both candidates declared victory Wednesday in the tightest and most divisive presidential election since the downfall of dictator Suharto in 1998.
However the polling agencies considered most reliable indicated a Widodo win, and the Jakarta benchmark index surged more than 2.5 percent at the open.
Investors have been hoping for victory for the Jakarta governor, the first serious presidential contender without deep roots in the Suharto era, seeing him as a potential reformer and clean leader in a graft-ridden country.
Stocks eased slightly in early afternoon trade but remained more than 1.8 percent up and at their highest level since May last year. The rupiah, which has retreated in recent weeks as Prabowo gained ground against Widodo, was up 0.6 percent at 11,565 to the dollar.
Official results are not expected until July 22.
"Joko Widodo looks to have won (the) presidential election in Indonesia, and hopes are high that he will make a fresh start on economic reform," said Gareth Leather from Capital Economics.
Widodo is seen as more likely than Prabowo to embark on much-needed reforms to inject new life into the economy, and as being more welcoming to foreign companies operating in Indonesia.
Prabowo, who was a top general in the Suharto era and has been dogged by allegations of human rights abuses, is seen as less friendly to overseas investors.
His speeches on the campaign trail have been marked by fiercely nationalistic rhetoric and pledges to further squeeze foreign companies operating in Indonesia, which is a member of the Group of 20 economic bloc.
Companies linked to Prabowo's campaign team fell on the Jakarta stock market Thursday.
Visi Media Asia, which belongs to tycoon supporter Aburizal Bakrie, slid 4.85 percent, while Media Nusantara Citra, belonging to wealthy backer Hari Tanoesoedibjo, lost 3.66 percent.
Despite the initial market euphoria over a potential Widodo win, concerns are also growing about a long period of uncertainty that could unnerve investors.
- 'History has been made' -
Official results are around two weeks away. Even if Widodo is then declared the winner, Prabowo can still challenge the result in the Constitutional Court, potentially dragging out the process for weeks.
Amid worries that the closely fought race could cause unrest, President Susilo Bambang Yudhoyono last night met both candidates at his residence outside Jakarta, urging them to wait for the official results before holding major celebrations.
"We call on all party members and volunteers not to organise a parade, it's better just to give thankful prayers," Widodo said late Wednesday after meeting the president.
Both candidates and their supporters kept a low profile Thursday, and there were no reports of large rallies.
Several polling agencies, which have accurately predicted the result of previous elections in Indonesia, gave Widodo a lead of four to five percentage points.
Prabowo, 62, however insisted that survey agencies followed by his camp gave him a narrow lead. He relied on three, less well-known agencies.
Should he be declared the official winner, 53-year-old Widodo is seen as likely to usher in a new style of leadership and consolidate democracy.
He shot to prominence in 2012 when he was elected Jakarta governor, and won legions of fans with his common touch. He would make regular tours of the metropolis's sprawling slums dressed in casual clothes.
Prabowo, in contrast, was head of the feared special forces under Suharto, admitted ordering the abduction of democracy activists before the dictator's downfall in 1998 and was formerly married to one of his daughters.
He has won support by playing up his military background, in a country where many have a yearning for a strong leader, but critics fear he may roll back democratic gains made since the fall of Suharto.
Some 190 million voters were eligible to cast ballots in Indonesia's third direct presidential election since the end of authoritarian rule.
Polling went smoothly across the country, from eastern Papua to the main island of Java and jungle-clad Sumatra in the west, and no major disruptions were reported.