SE Asia Stocks-Indonesia shares down over 3 pct on election disappointment

April 10 (Reuters) - Indonesian stocks fell over 3 percent

on Thursday after parliamentary election results signalled

possible formation of a weak government that will have limited

ability to push for reforms needed to boost investments in the

Southeast Asia's largest economy.

Early counts by pollsters showed the main opposition

Indonesian Democratic Party-Struggle (PDI-P) failed to win

enough votes to nominate popular Jakarta governor Joko "Jokowi"

Widodo for the powerful presidency.

Investor enthusiasm for Indonesia had been on the rise on

the belief that Jokowi might even win enough votes to avoid

having to go to a run-off in three months time.

Jakarta Composite Index was down 3.2 percent at

4,764.66 by midday, its worst performance in a day since Aug.

27, 2013.

Investors have expected PDI-P to secure adequate vote to

nominate Jokowi to the July presidential polls and disappointing

outcome could raise concern that the country could run into a

period of political confusion.

The fall was across the board, led by financials with Bank

Mandiri and Bank Rakyat Indonesia falling

5.6 percent and 4.9 percent, respectively.

Bank Mandiri and Bank Rakyat Indonesia have jumped 10.2

percent and 9.1 percent since March 14 after the opposition

announced Jakowi's candidacy.

"With larger-than-expected coalition required by PDI-P, we

see possible formation of a weak government with limited ability

to push through necessary reforms and policies ahead," said

Jakarta-based Harry Su, head of research of Bahana Securities.

Su in a note advised investors to take profit on sectors

which have appreciated the most like infrastructure, property

and banks in the lead up to the parliamentary elections, with

plenty of political uncertainty ahead.

"Nevertheless, with plenty of election spending/money

politics, we expect domestic consumption to be well supported.

With that said, we advise investors to rotate into consumer

staples and telcos, which should outperform in a potential

market correction ahead due to their defensive nature."

The Indonesian rupiah, the best performing Asian

currency so far this year, also fell 0.6 percent to 11,350 per

dollar as of 0445 GMT as foreign and local banks took profits

after the poll results.

Other Southeast Asian markets were range bounded as positive

sentiment on the minutes of the Federal Reserve's latest policy

meeting that suggested the Fed may be more cautious towards

raising interest rates than markets had thought was offset by an

unexpected fall in Chinese exports in March.

Thailand was up 0.3 percent and the Philippines

traded 0.6 percent firmer, while Singapore and

Vietnam were down 0.4 percent and 0.2 percent

respectively.

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SOUTHEAST ASIAN STOCK MARKETS

Change at 0552 GMT

Market Current Prev Close Pct Move

TR SE Asia Index* 416.80 418.94 +0.51

Singapore 3198.64 3209.92 -0.35

Kuala Lumpur 1856.48 1855.75 +0.04

Bangkok 1386.58 1382.02 +0.33

Jakarta 4764.66 4921.40 -3.18

Manila 6629.29 6587.49 +0.63

Ho Chi Minh 602.04 603.25 -0.20

(Reporting by Shihar Aneez in Colombo and Viparat Jantraprap in

Bangkok; Editing by Anand Basu)