Acceleration of infrastructure spending disbursement is expected to be the catalyst for a number of large cap stocks, such as Jasa Marga Tbk (JSMR), Semen Indonesia Tbk (SMGR), Bank Mandiri Tbk (BMRI) and Bank Rakyat Indonesia Tbk (BBRI). The government will encourage infrastructure development in the second half of 2017 to
prove its performance ahead of the 2019 General Election.
Henry Wibowo, Acting Head of Research of Bahana Sekuritas, said the government is targeting a fiscal deficit by 2.67 percent in the 2017 State Budget Revision (APBN-P). “The government is expecting to boost spending in the second half of 2017. In addition, Indonesia will be the host nation of the Asian Games next year.
All facilities and infrastructure must be ready to use before the guests come,” said Henry.
In the period 2015 to 2019, Indonesia’s total infrastructure spending is estimated at IDR 1.375 trillion, up nearly 50 percent compared to spending in 2005 to 2014. The funds will be used to build approximately along 836 km, 10,198 meters of bridges, 13 airports, 61 seaports, and railways spread across Indonesia.
Bahana recommended large cap companies with infrastructure-related, such as JSMR and SMGR with target prices of IDR 6,600 and IDR 11,600 respectively. SOE banks which give infrastructure financing are also recommended, namely BMRI and BBRI with target prices of IDR 16,250 and IDR 17,000. (*)