Source : Business Times – 9 Jun 2009
Indonesian property stocks are ’set for a comeback’ on expectations banks will cut borrowing costs, boosting housing demand, CLSA Asia-Pacific Markets said. Cement makers will also benefit from new construction, it said.
PT Ciputra Development, PT Bumi Serpong Damai and cement producer PT Holcim Indonesia are among the companies that should benefit from lower mortgage rates, CLSA’s Jakarta-based analyst Nicholas Cashmore wrote in a note dated yesterday.
The central bank has reduced its key interest rate seven times since December, widening the room for banks to lower the cost of home loans in Asia’s third-most populous nation. Urbanisation and population growth will underpin demand for housing, Mr Cashmore said in the note.
A plan by PT Bank Central Asia, the mortgage market leader, to cut rates will start a ‘frenzy of mortgage demand that will drive land and stock prices higher,’ Mr Cashmore said. ‘This is Ground Zero for Indonesia’s first housing-led rally.’ Bank Central Asia director Jahja Setiaatmadja couldn’t be reached on his mobile phone to confirm the planned rate cut.
The Jakarta Construction, Property and Real Estate index has gained 36 per cent this year after falling 59 per cent in 2008, when it tracked losses in the broader gauge as a global credit crisis led investors to exit high-yielding markets, including Indonesia. Mining stocks have driven the 53 per cent gain in the benchmark Jakarta Composite index so far this year.
Shares of Ciputra Development, Indonesia’s third-biggest property developer, jumped 10 per cent to 770 rupiah yesterday here, set for its steepest increase since April 29.
Holcim, Indonesia’s third-largest cement maker, rose 0.9 per cent to 1,090 rupiah after earlier gaining as much as 6.5 per cent.
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