Jakarta. Amid stellar performance by Indonesia's stock market in 2016, sharp investors, and some that were just lucky, may have found themselves holding stocks that have more than doubled in value over the year.
After all, the odds of a jackpot were quite favorable. Fifty of a total of 541 stocks have more than doubled in value during the year, excluding the handful of stocks that started trading on the Indonesia Stock Exchange (IDX) at some point during the year. On the other side of the coin, there were 31 stocks that lost at least half of their value this year.
Reza Priyambada, a senior analyst at brokerage Binaartha Sekuritas, said the stocks that grew more than 100 percent in the year to date were mostly in small-cap companies, with market capitalization below Rp 1 trillion ($74 million). These stocks declined a year ago, and started recovering this year, he said.
Flashy corporate action in the media also play a big role to drive sentiment towards stocks, Reza said, with investors paying close attention to whether companies getting new contracts or renewing existing contracts, diversifying their businesses or making acquisitions.
Debt-ridden coal miner Bumi Resources, for example, ended the year with its stock price more than five times higher. The company reached a deal with its creditors to resolve its massive debt amid a surprise recovery in global coal prices, which fueled sentiment that the miner may have started on journey to reclaim its past glory.
The mining and energy sector began the year with a bleak outlook as China's economic slowdown in the previous two years undermined demand for the commodities. But around mid-2016, miners' efforts to tighten supply led to a rebound in prices.
That lead to some spectacular performances in the sector. Tin plate manufacturer Pelat Timah Nusantara scored the highest increase of 4,400 percent in 2016, leaving its shareholders 45 times wealthier at the end of year. Supporting firms in the sector also benefitted from the windfall with coal mining contractor Delta Dunia Makmur having risen 844 percent while heavy equipment distributor Hexindo Adiperkasa gained 147 percent.
In the manufacturing sector, investors seemed to have been persuaded by the government narrative of adding additional capacity of 35,000 megawatts to the national grid to bring electricity to all Indonesians over the next several years. That lead to sharp increases in the share prices of cable manufacturers, which are critical suppliers for the program to succeed. Among those were Jembo Cable, which increased by 159 percent, and KMI Wire and Cable, which booked a 132 percent gain.
Indonesia's largest petrochemical holding company, Barito Pacific, surged by 1,027 percent and its subsidiary Chandra Asri Petrochemical also rose by 499 percent. The latter completed its new naphtha cracker plantation, which should provide a boost to the company's financial performance, according to an assessment from rating agency Moody's Investor Service.
In a relatively weak property sector, shares of PP Properti, the housing and apartment developer arm of state-owned construction firm PP, rose more than seven-fold as investors appeared keen to tap into the company's aggressive expansion.
Another stellar performer was state-controlled pharmaceutical company Indofarma, which gained 2,686 percent. The share performance of one of the country's oldest pharmaceutical companies baffled some analysts, as it remained in the red for the year. However, Indofarma targets to return to profit next year, projecting an increase in sales after completing a herbal medicine plant and distribution centers.
Reza said the trend for 2017 will depend on the direction in the economic and political situation. However, if the recovery in commodity prices continues in 2017, returns from mining and energy companies' penny stocks will further increase.