Construction Stocks Surge at the Start of the Year

Entering 2018, construction stocks rose in line with the Composite Stock Price Index (IHSG) on the Indonesia Stock Exchange, which continued to hit new highs and broke the 6,600 level last week. PT Mitra Pemuda Tbk (MTRA) shares even recorded an increase of more than 40% this month, the highest among other construction stocks. The upcoming release of 2017 financial year-end reports is expected to further boost construction stocks.

The commitment of the Joko Widodo and Jusuf Kalla administration to build infrastructure throughout the archipelago by improving connectivity has had a positive impact on construction issuers. This is especially true for state-owned enterprises (SOEs) in the construction sector (BUMN Karya) such as PT Wijaya Karya (Persero) Tbk, PT Waskita Karya (Persero) Tbk, PT Adhi Karya (Persero) Tbk, and PT PP (Persero) Tbk. These BUMN Karya stocks have risen by more than 20% this year.

BUMN Karya issuers, which have received many infrastructure projects from the government, are once again being sought after by investors. Previously, these state-owned construction companies were avoided by investors due to concerns about liquidity related to government infrastructure project payments. However, with the completion of several projects underway, these BUMN Karya will soon receive new capital from payments for projects that will be completed this year, enabling them to finance other projects.