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JAKARTA (Reuters) - 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 say.
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 Bandung.
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 upside.
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 election.
Reporting by Eveline Danubrata and Fransiska Nangoy; Additional reporting by Cindy Silviana and Gayatri Suroyo; Editing by Bill Tarrant