Telecommunications, consumer goods, cement and mining are among the smart sectors to go for in the stock market in 2010, analysts predict.
The expected recovery of the global economy and stronger domestic demand supported by solid macroeconomic conditions are believed to consolidate the context and confidence for increased growth in several key sectors next year.
The director of local investment managing company First State Investment Putut Endro Anda
nawarih believes that the consumer goods sector will be among the highlights for next year, considering that two-third of the country’s Gross Domestic Product (GDP) generally came from domestic consumption.
“Consumption is basic, so the demand will always there and with the economy getting better, there is a big chance that demand will also increase,” he said on Wednesday.
The research from First State shows that one of the factors that will push demand is the urbanization process, whereby people in the rural areas are moving to the city.
The data show that there are 110 million Indonesians living in cities across the country and the number is predicted to grow by 3.8 million every year.
This growing urban population is creating a bigger market for the consumer goods industry, Putut says.
Aside from consumer goods, Putut hinted that rising demand would also benefit the automotive, cement and telecommunications sectors.
Rising demand is also supported by supportive financial policies, with the government targeting that the Indonesian economy will expand 5.5 percent this year in line with the global economy recovery.
The central bank just announced that it is holding its key interest rate at 6.5 percent for the fifth straight month, predicting that there will be no significant inflationary pressures in the first half of this year.
“This is a good thing to create more demand as increased demand means bigger revenue and better performance, which in the end will be a positive contribution for the movement of shares in the stock market,” he said.
According to the latest data from the Indonesia Stock Exchange, the fastest growing sectors in the stock market last year were mining (137 percent), followed by manufacturing (120.89 percent), consumer goods (94.99 percent) and banking (94.49 percent) as of November 2009 compared to a
year earlier.
Many analysts have predicted that mining and commodities will be among the bullish sectors next year as the global economic recovery is expected to spur demand.
The global economy will swing into positive territory next year. All the Indonesian economic indicators are showing improvements, including the people’s purchasing power.
The rising of people’s purchasing power will increase demand for commodities and minerals.
“Most of the [global] demand will come from China and India, countries, which so far have managed to post positive growth amid the global economy turbulence,” Trimegah Securities president director Aviyasa Dwipaya said.
The good prospects in the mining sector, Avisaya thinks, will be a good thing for Indonesia where there are good short term prospects for coal with expansion plans for gold and copper.
Indonesia is one of the world’s biggest producers of several commodities likely to benefit from a commodities boom in a recovering global market, with palm oil and rubber likely to do well.
