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PT UBS Securities Indonesia had predicted the composite index
for Jakarta stocks will reach 3,050 points by the end of the year,
mainly due to robust performance in the consumer and commodity sectors.
Head of research Joshua Tanja said Monday many investors would this
year concentrate in particular on consumer companies as domestic
consumption would remain strong.
"Strong consumer demand will eventually push up investment in the
sector, making companies in that sector attractive."
Last year, the index saw a 52 percent increase and closed at 2,745
points.
Previously, the Indonesia Stock Exchange (IDX) predicted that the index
had the potential of reaching 3,600 by year-end.
UBS country director Sarah-Jane Wagg pointed to an upward trend in
volume -- now hovering around US$500 million per day -- as another
indication of the attractiveness of the nation's stock market, both to
domestic and foreign investors.
That figure is more than double the 2006 average daily volume, which
didn't reach $200 million.
On the threat of inflation, which could derail consumer spending,
Joshua was upbeat that the high prices of certain food staples, which
have pushed up inflation lately, would be contained later on this year.
Furthermore, high consumption would be supported going forward by low
interest rates. "The low rates are positive for credit-based
consumption, especially in automotive sales," Joshua said.
Indonesians generally purchase motorcycles and cars on credit, with
total loans reaching Rp 73.6 trillion last year.
With cars and motorcycle sales estimated to grow by 20 percent, shares
in firms such as PT Astra International -- the country's largest
automotive firm -- will become more attractive, Joshua said.
In addition to Astra, he added, investors would also focus on companies
like retailer PT Matahari Putra Prima.
Danny Konjongyan, Matahari corporate secretary, said the company
targeted a 20 percent increase in revenue this year with the opening of
new nine hypermarts and eight department stores throughout the country.
Companies operating in the commodity sector will be another top option
for investors this year.
"The prospects for commodities, especially coal, is positive, driven by
the high price," he said.
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