Stocks in the mining, financial, and infrastructure sectors are likely to gain momentum in the second half of 2017. The stock movement in these sectors is triggered by the global commodity prices recovery, improved credit cycles, and good bargaining power.
Taye Shim, Head of Research at Mirae Asset Sekuritas Indonesia, said that the mining sector will grow 5.6 percent, the financial sector by 3.4 percent and infrastructure sector by 3 percent in the second half of 2017. Mirae Asset rates overweight for these sectors.
Demand for coal from China is expected to increase as the hydroelectric power plants (PLTA) in Gezhouba Dam and Three Gorges Dam are flooded causing decline in electricity supply so it must be closed with the addition of the capacity of steam power plant (PLTU). This news gave a positive sentiment for coal producers, such as
Adaro Energy Tbk (ADRO) and Bukit Asam Tbk (PTBA).
In the financial sector, money supply growth shows an upward trend of above 10 percent, which reflects good banking liquidity but this liquidity has not been channeled to the real sector because public hold consumption. For example, Bank Central Asia Tbk (BBCA) has 16.7 percent growth of third party funds (DPK), higher than the 11.9
percent growth in loans.
Meanwhile, telecom operators’ stocks are becoming an option in the infrastructure sector as they have strong bargaining power. “There is a shift in public consumption, so that the need to communicate becomes the new consumption. Telekomunikasi Indonesia Tbk (TLKM) has the strongest bargaining power since its cash position and balance sheet support to dominate the market,” said Taye Shim.
Besides these three sectors, Mirae Asset recommended Kalbe Farma Tbk (KLBF) in line with increased public awareness of the Health Insurance program, higher sales volume of medical equipment, and online product sales.
Barito Pacific Tbk (BRPT), the holding company of Chandra Asri Petrochemical Tbk (TPIA), which recently entered into LQ45 also became Mirae’s choice. “Once it has entered, we are committed that it will enter into MSCI/ FTSE Index,” said Taye Shim. The market capitalization as of August 14, 2017 has reached IDR 24.7 trillion. (*)