REPUBLIKA.CO.ID, JAKARTA - Indonesian stocks fell over 3 percent on Thursday after parliamentary election results signaled 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 for Struggle (PDIP) 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 PDIP 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 PDIP, 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. 

The Indonesian rupiah, the best performing Asian currency so far this year, also fell 0.6 percent to 11,350 per USD as of 0445 GMT as foreign and local banks took profits after the poll results.

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