Jakarta. Indonesia’s main stock index hit another record high on Friday as investors maintained an upbeat earnings outlook for companies that they believe should brace for surging consumer demand.

The Jakarta Composite Index (JCI) climbed 0.2 percent to 5,400 at the end of the trading week, closing out weekly gains at 0.5 percent.

Around 5.4 billion shares, worth Rp 5.2 trillion ($404.7 million), changed hands on the local bourse, with 150 gainers and 117 decliners.

Foreign investors made up 32 percent of the trading activity, buying Rp 886 billion more shares than they sold. Since the beginning of the year, foreign investors have totaled a net buy of Rp 7.4 trillion.

Analysts attributed the rising appetite toward stocks to investors outlook on companies earnings this year.

The local bourse could climb by up to 20 percent this year, lifted by improving corporate earnings, said Jahanzeb Naseer, the head of research at Credit Suisse Securities Indonesia. The brokerage is most active in the country in term of trading value, handling 5 percent of stocks traded last year.

“We forecast that the index will reach between 6,000 and 6,300 by the end of the year, largely from earnings growth,” Naseer said during a media briefing in Jakarta on Friday.

The JCI climbed by 22 percent last year, which largely consisted of rebounds from losses during 2013’s so-called tapering tantrum, according to Naseer. So far this year, the index has gained 3.3 percent.

“We expect a 15 percent to 16 percent earnings growth this year [in Indonesia]… This will be one of the fastest growth in Asia,” said Naseer.

Some blue chips companies, such as the country largest lender Bank Mandiri, reported slowest earnings growth in years for their 2014 earnings.

This year, telecommunication companies are expected to outperform the index on the back of rising smartphone usage in the country, which should boost earnings from mobile data, Nasser said.

Solusi Tunas Pratama, a tower operator under investment,  has climbed 14 percent so far this year, while state-controlled Telekomunikasi Indonesia, the country’s largest telecommunication company, rose 0.9 percent

Stocks in the automotive and the property sectors will increase as consumer demand for transportation and housing remains robust amid a looser interest rate environment, Naseer said.

“With interest rates coming down, 2015 is going to be a year where we’re forecasting more demand than supply [in property], so prices will do well,” said Naseer, alluding to the central bank’s recent policy rate cut.

Bank Indonesia lowered its policy rate by 25 basis points to 7.5 percent on Tuesday amid easing inflationary pressures.

Naseer added that banks are starting to offer promotional packages on mortgages, seeing the potential demand for home loans.

GlobeAsia & Investor Daily

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Source: The Jakarta Globe