In terms of average daily turnover, 2014'€™s level of Rp 4.7 trillion (US$396 million) was down compared to 2013'€™s average daily transaction of Rp 4.9 trillion ($469 million), down 4 percent y-o-y in rupiah basis and 16 percent in dollar terms, partly also dragged down by changes in trading units and alterations in price fractions.

Table 2 shows the 10 best 2014 performing stocks within our coverage, led by construction players PT Waskita Karya Persero Tbk (WSKT), PT Pembangunan Perumahan Persero Tbk (PTPP), PT Wijaya Karya (WIKA), PT Adhi Karya Persero Tbk (ADHI) and PT Total Bangun Persada (TOTL), helped by the President Joko '€œJokowi'€ Widodo euphoria around the expected strong government expenditure on infrastructure.

This is followed by property-related counters PT Lippo Cikarang Tbk (LPCK), PT Summarecon Agung Tbk (SMRA) and PT Pakuwon Jati Tbk (PWON). On the flip side, the 10 worst performing stocks in our covered universe were dominated by coal plays PT Bumi Resources Tbk (BUMI), PT Indo Tambangraya Megah Tbk (ITMG) and PT Harum Energy Tbk (HRUM) as well as consumer discretionary, PT Supra Boga Lestari Tbk (RANC) and PT Ramayana Lestari Sentosa Tbk (RALS), and poultry counters PT Malindo Feedmill Tbk (MAIN) and PT Japfa Comfeed Indonesia Tbk (JPFA).

On the initial public offering (IPO) front, despite last year'€™s limited number of new listings (2014: 23; 2013: 30) raising Rp 9 trillion ($720 million), the performances (table 3) were strong, providing an average return of about 75 percent (2013: 2 percent). However, stripping out the top six best-performing IPOs PT Asuransi Mitra Maparya Tbk (ASMI), PT Bali Towerindo Sentra Tbk (BALI), PT Wijaya Karya Beton Tbk (WTON), PT Link Net Tbk (LINK), PT Batavia Prosperindo International Tbk (BPII), PT Sitara Propertindo Tbk (TARA), which provided triple-digit returns, the average IPO performance would come down to 19.5 percent, more in line with the overall JCI performance.

Average fundraising was also lower at Rp 391 billion ($31 million), compared to 2013'€™s Rp 557 billion ($53 million), translating to an average market cap of $104 million (assuming a 30 percent average free float), suggesting relatively small IPOs. Note that on Jan. 17, 2014 there was one re-listing: Tunas Alfin (TALF), which we have not included in our IPO list. In January 2015, there is only one company (Bank Yudha) planning to list that month, although we note that several state-owned companies are planning corporate actions in the form of IPOs and rights issues throughout 2015.

Helped by lower global oil prices, we applaud Jokowi'€™s 2014 year-end closer move in partly dismantling Indonesia'€™s inefficient energy subsidy system by lowering the gasoline price from Rp 8,500 liter to Rp 7,600 (down 10.6 percent), with diesel prices cut 3.3 percent from Rp 7,500 per liter to Rp 7,250, while kerosene prices remained unchanged at Rp 2,500 per liter. Once approved by the legislature, in our view this unprecedented government decision will positively impact the market, as follows:

The fixed-subsidy system (diesel subsidy of Rp 1,000 a liter) provides a bridge for the government'€™s next step of completely doing away with fuel subsidies. At this stage, the gasoline subsidy is scrapped, although the government will continue to pay for gasoline-distribution costs for areas outside of Java, Madura and Bali.

Lower total fuel subsidy to around Rp 17 trillion, accounting for just 1 percent of total government expenditure from Rp 276 trillion or 13.5 percent, translates to our estimated infrastructure increased spending of Rp 317 trillion, up 98 percent from Rp 160 trillion in 2014.

A drop in inflation to reach the 5.04 percent level (2014: 8.36 percent y-o-y) from 5.6 percent previously, helped also by lower commodity prices on depressed oil prices. This should pave the way for lower interest rates in in the second half of 2015 once the US Federal Reserve rate hike overhang is out of the way.

Decreased current-account deficit (CAD) to 2 percent in 2015, down from an estimated 2014 level of 3 percent, should eventually allow the local currency to appreciate to the Rp 11,500 per US dollar level based on our forecast.

More manageable CAD could lead to an investment upgrade from Standard & Poor'€™s, which would result in lower borrowing costs to help accelerate the much-needed infrastructure-related projects.

Thus, going into 2015, we have a 5,900 target for the JCI, in line with our 2015F market EPS growth of 12 percent y-o-y.

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The writer is senior associate director/head of research at Bahana Securities.

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