Indonesia's President Joko Widodo speaks at a press conference after a quick count result during the Indonesian elections in Jakarta, Indonesia on April 17, 2019. Andrew Gal | NurPhoto | Getty Images

Indonesian financial markets jumped on Thursday after unofficial election results showed incumbent President Joko Widodo — popularly known as Jokowi — winning a second term in office. The Jakarta composite jumped as much as 2.32 percent at the open on Thursday. The stock market was closed on Wednesday when Indonesians voted in the world's largest single-day elections. Indonesia's currency, the rupiah, strengthened as much as 0.6 percent on Thursday to its strongest level against the U.S. dollar in nearly two months. Such optimism in the financial markets was not shared by a number of analysts, who pointed out that Jokowi's reform ambitions would again face challenges in a divided parliament. They said the likely absence of major reforms and a tough external environment means growth in Southeast Asia's largest economy may stagnate. "A fragmented parliament and external vulnerabilities have held back Jokowi's ambitious reforms and infrastructure spending plans over the last five years," said Priyanka Kishore, head of India and Southeast Asia economics at research firm Oxford Economics. "Both of these factors are likely to continue casting a shadow over his second term as well," she wrote in a Wednesday report. Kishore projected the Indonesian economy to grow by an average 5.1 percent per year from 2019 to 2027.

"Quick counts" tallied by private pollsters based on samples of actual votes showed that Jokowi is set to widen his lead over former army general Prabowo Subianto, whom he narrowly beat in the 2014 presidential election. The political party backing Jokowi, the Indonesian Democratic Party of Struggle or PDIP, also looks set to win the most seats in parliament, according to those pollsters. But the early vote counts also showed that Prabowo's Great Indonesia Movement Party, or Gerinda, may beat PDIP's coalition partners to be the second-largest party in parliament — which could increase frictions in the chamber and stall the passing of legislation, Kishore said. Even among coalition partners, there will be constraints that Jokowi must navigate to push through his reform agenda, said Peter Mumford, practice head of Southeast and South Asia at risk consultancy Eurasia Group. "Jokowi's victory ... will be insufficient to break him free of the constraints of coalition partners and vested interests — elite political, military, religious and state-owned enterprise (SOE) leaders," Mumford wrote in a Wednesday note. "Thus, we are not optimistic that Jokowi will use his second term to push ahead with serious structural reform." The Indonesian election commission is expected to release official results on May 22.

Nothing to lose

Despite that, many in Indonesia are hopeful that Jokowi would do more in his second term as president partly because he has nothing to lose. The Indonesian constitution only allows a president to serve two five-year terms. "He doesn't need to worry whether he will get reelected again by 2024 so he could do something more, but we have to wait (and see)," former Indonesian Finance Minister Muhamad Chatib Basri told CNBC's Martin Soong in Jakarta on Thursday.