Indonesian stocks may gain most since 1993
Tuesday, 4 August 2009
JAKARTA, Aug. 3 (Bloomberg): Indonesia's benchmark stock index may gain the most since 1993 as a growing economy and easing inflation bolster companies' earnings, according to the manager of the nation's best-performing fund.
The stock index may advance to 2,600 by year-end, said Winston Sual, a director at Jakarta-based PT Panin Securities. That would be a 92 per cent gain from last year's close, the steepest increase in 16 years.
The Jakarta Composite index has risen 73 per cent this year, Asia's second-best performer among 89 major global markets monitored by Bloomberg. Shares advanced as Southeast Asia's biggest economy skirted the global recession and after President Susilo Bambang Yudhoyono was reelected, as his government is expected to maintain policies that have bolstered growth.
"Indonesia's economy has been proven to be resilient against the global recession and that lends a premium to shares in Indonesia," Sual, who manages about $202 million in assets, said by telephone in Jakarta today. Furthermore, "as inflation is still low, the monetary policy to ease liquidity will likely continue until year-end."
Inflation slowed to a nine-year low in July, enabling the central bank to cut in July its key interest rate for an eighth month since December. Easing inflation and lower borrowing costs improve purchasing power. Domestic consumption accounts for about two-thirds of the economy, which expanded 4.4 per cent in the first quarter, the fastest pace in Southeast Asia.
Companies' "good" earnings should help extend the stock market's gains, Sual added.
PT Bank Mandiri, the nation's biggest financial institution by assets, posted its best quarterly profit in five years. The shares have more than doubled this year. PT Telekomunikasi Indonesia, the nation's biggest telephone service provider and the largest company by market value, posted its biggest quarterly profit in almost seven years and first-half profit at PT Tambang Batubara Bukit Asam, which holds a quarter of Indonesia's coal reserves, more than doubled.
Even so, rising commodity prices threaten to revive inflation, dampening purchasing power, Panin's Sual said. Crude oil has gained 57 per cent this year, boosting the cost of energy. Indonesia imports about one-third of its oil needs.
Panin Dana Maksima has risen 36 per cent in the past five years, the best-performing fund in Indonesia.
Yudhoyono unveiled today the government's proposed 2010 state budget, forecasting the economy to expand 5 per cent or "even more" next year as Indonesia seeks to spur investment in infrastructure projects.
"A strong emphasis on infrastructure and good implementation will generate higher growth without the fear of adding to inflation," said Sual. "Infrastructure can be a prime mover for the economy as a whole because it has a large multiplier effect."
The stock index may advance to 2,600 by year-end, said Winston Sual, a director at Jakarta-based PT Panin Securities. That would be a 92 per cent gain from last year's close, the steepest increase in 16 years.
The Jakarta Composite index has risen 73 per cent this year, Asia's second-best performer among 89 major global markets monitored by Bloomberg. Shares advanced as Southeast Asia's biggest economy skirted the global recession and after President Susilo Bambang Yudhoyono was reelected, as his government is expected to maintain policies that have bolstered growth.
"Indonesia's economy has been proven to be resilient against the global recession and that lends a premium to shares in Indonesia," Sual, who manages about $202 million in assets, said by telephone in Jakarta today. Furthermore, "as inflation is still low, the monetary policy to ease liquidity will likely continue until year-end."
Inflation slowed to a nine-year low in July, enabling the central bank to cut in July its key interest rate for an eighth month since December. Easing inflation and lower borrowing costs improve purchasing power. Domestic consumption accounts for about two-thirds of the economy, which expanded 4.4 per cent in the first quarter, the fastest pace in Southeast Asia.
Companies' "good" earnings should help extend the stock market's gains, Sual added.
PT Bank Mandiri, the nation's biggest financial institution by assets, posted its best quarterly profit in five years. The shares have more than doubled this year. PT Telekomunikasi Indonesia, the nation's biggest telephone service provider and the largest company by market value, posted its biggest quarterly profit in almost seven years and first-half profit at PT Tambang Batubara Bukit Asam, which holds a quarter of Indonesia's coal reserves, more than doubled.
Even so, rising commodity prices threaten to revive inflation, dampening purchasing power, Panin's Sual said. Crude oil has gained 57 per cent this year, boosting the cost of energy. Indonesia imports about one-third of its oil needs.
Panin Dana Maksima has risen 36 per cent in the past five years, the best-performing fund in Indonesia.
Yudhoyono unveiled today the government's proposed 2010 state budget, forecasting the economy to expand 5 per cent or "even more" next year as Indonesia seeks to spur investment in infrastructure projects.
"A strong emphasis on infrastructure and good implementation will generate higher growth without the fear of adding to inflation," said Sual. "Infrastructure can be a prime mover for the economy as a whole because it has a large multiplier effect."