Indonesia’s Stocks to Rise 32%, Credit Suisse Says (Update2)
By Berni Moestafa and Achmad Sukarsono
Dec. 16 (Bloomberg) — Indonesia’s stock index may climb 32 percent next year after outperforming measures in Asia’s biggest markets in 2009 as companies raise debt to expand amid a pickup in economic growth, according to Credit Suisse Group AG.
The Jakarta Composite Index is set to rise to 3,300 by the end of 2010, led by consumer, infrastructure and resource stocks, said Arief Wana, director of equity research at PT Credit Suisse Securities Indonesia, the local unit of the Swiss bank. The gauge added 1.1 percent to 2,522.55 at the close, the highest in two months.
The stock index has risen 86 percent this year, beating the region’s 10 biggest stock markets, as domestic spending helped boost Southeast Asia’s biggest economy. Companies are expanding on signs demand will improve as growth accelerates, with the central bank forecasting that the economy will grow 5.5 percent in 2010 from an estimated 4.3 percent this year.
“We’re bullish on Indonesia,” Wana said in an interview yesterday. “As we believe that Indonesia is entering into a higher growth phase, the companies’ current much stronger balance sheet should be able to sustain a high rate of return- on-equity.”
The Jakarta Composite has gained 7.7 percent since Wana said Aug. 31 that the measure may rise to 2,685 points by end of 2010.
Indofood, United Tractors
Wana likes PT Indofood Sukses Makmur, Indonesia’s biggest instant noodle maker and PT United Tractors, the nation’s largest heavy equipment seller that also mines coal. His recommendations on Indofood and United Tractors produced the best total returns based on the stocks’ gains over the past year compared with other analysts, according to Bloomberg data.
Domestic bank lending may rise 15 percent next year from less than 10 percent estimated for this year, Bank Indonesia said on Dec. 9. The central bank kept its benchmark interest rate at a record low of 6.5 percent this month, making borrowing costs affordable.
PT Telekomunikasi Selular, the nation’s biggest mobile- phone operator, obtained a 5.55 trillion rupiah ($586 million) loan from PT Bank Mandiri in July. PT Bakrieland Development said on Nov. 30 it’s studying funding options such as bonds and loans for next year.
“The risk to our view is tightening of central bank’s monetary policy not only in Indonesia, but also in the region,” Wana said. He expects a “short-term correction” for the market before it rebounds.