Analysts say the Jakarta Stock Exchange’s main index may climb as much as 15% next year as the rally in Indonesian shares continues, underpinned by optimism about economic growth and political stability.
"The Jakarta Stock Exchange main index may rise to break above the (psychologically) important level of 2000 in 2007," said Adrian Rusmana, vice president for the equities division at Kresna Securities.
Private sector analysts say the main index may have room to rise as much as 270 points next year, driven by what they expect to be economic growth of between 5.5% and 6.5%.
Those projections compare with an official government forecast of 6.3% economic growth in the same period. The government has projected 5.8% growth in 2006 compared with a 5.6% expansion last year.
President Susilo Bambang Yudhoyono’s announcement earlier this month that the government likely won’t hike electricity tariffs should also help companies improve their financial performance, Hassan said.
Meanwhile, for Semen Gresik, analysts said the company will likely benefit from the government’s plan to develop infrastructure across the country. Indonesia plans to spend around IDR150 trillion ($16.5 billion) over the next five years on infrastructure development and in November unveiled a total of 10 "model projects" valued at $4.4 billion and designed for speedy tender and implementation.