Firms operating in basic resources, the consumer sector, infrastructure and heavy industries and the financial sectors will remain the best bet for investors next year as the main drivers in the stock market, a study predicts.
An outlook report announced Thursday by CIMB Securities showed that Indonesia’s stock market index could grow by 18.9 percent by the end of 2010, driven by companies in expanding sectors.
CIMB Securities regional equity strategist Chang Chiou Yi said the sectors would provide relatively good value in a choppy market environment, which is likely to persist into 2010.
“Based on our market-adjusted return-on-equity [ROE] and price-to-book value [P/BV] measurements, we find [these] sectors provide more value than others.”
CIMB predicted the Jakarta stock index would close at 2,950 at the end of 2010, up from its current level of around 2,500. The index has so far increased by 73.9 percent from its opening level of 1,437 this January.
“The Jakarta Composite Index has been an out-performer [against other Southeast Asian indices], backed by stronger commodity outlooks, resilient growth and a structural consumer/infrastructure story,” Chang said.
Among the firms marked for robust growth in 2010 are cement maker PT Indocement Tunggal Prakarsa, cigarette giant PT Gudang Garam and coal producer PT Bumi Resources.
The report predicts that Indocement’s share price would rise to Rp 15,500 by December 2010 from Rp 11,600 in November 2009.
Gudang Garam share prices are likely to rise to about Rp 24,250 by from the current 17,150. Bumi Resources meanwhile is expected to achieve a rise in its share price up to Rp 3,200 from November’s Rp 2,450.
CIMB also sees a good year ahead for Bank Danamon and Bank Mandiri. Danamon’s share price would rise to Rp 6,700 by end 2010 from Rp 4,450 in November, while Mandiri would go up to Rp 6,200 from Rp 4,700.
The report also gives “outperform” recommendations for Inco Indonesia, Adaro, Hexindo, United Tractors and Ramayana Lestari. The recommendation means the returns are expected to exceed a benchmark’s total return by 5 percent or more over the next 12 months.
CIMB, on the other hand, recommended to “reduce weighting on property sectors in the Southeast Asian region, given the rising policy and rates risks,” Chang said.
Meanwhile, CIMB’s senior analyst Nigel Foo said the index might peak for the year in the first quarter.
“The last time the index was on its peak was in 2000, and before that in 1990. If this is a 10-year cycle, then we are seeing another peak coming, I would say in the first quarter.”
However, he warned that the capital market should stay alert to possible correction after the peak took place. (adh)
