MANILA’S Metro Pacific Investments Corp., Indonesia’s PT Krakatau Steel and Airports of Thailand Pcl. are among the top investor picks as Southeast Asian governments embark on programs to boost roads, rail, ports and power plants.

Philippine President Rodrigo R. Duterte is promising P8 trillion ($160 billion) of spending over his six-year term, while Thailand’s military-led government plans to list an infrastructure fund on the stock exchange in March. Indonesia has set aside almost 10% more to spend on projects this year and Malaysia is pushing ahead with plans including a high-speed rail line from Kuala Lumpur to Singapore.

Thailand and the Philippines are likely to see the biggest increase in infrastructure spending over the next few years, while in Indonesia and Malaysia, budgetary constraints may mean the rhetoric of politicians translates into comparatively little extra outlay, Capital Economics Ltd. said in a Jan. 16 research note.

Below are some selections from fund managers and analysts across the region:

Within Southeast Asia, Old Mutual Global Investors favors Indonesia, said Joshua Crabb, head of Asian equities in Hong Kong. The Jakarta Composite Index is cheap and President Joko Widodo’s improved political standing will give him some firepower to push ahead with his infrastructure plans, despite perceived fiscal constraints, he said. Mr. Crabb said he liked Krakatau Steel. While acknowledging the budgetary risk, Jemmy Paul, investment director at PT Sucorinvest Asset Management in Jakarta, said many Indonesian infrastructure-related firms have received capital injections from the government and have good revenue outlooks. PT Adhi Karya, PT Pembangunan Perumahan and PT Waskita Beton Precast are among his top construction picks, along with toll road operator PT Jasa Marga. Krakatau Steel is also interesting as prices are on the rise due to stronger demand from projects, Mr. Paul said. Earnings growth for Indonesian construction companies will still be there, but investors should emphasize cash flow and look for companies with stronger balance sheets, said Jeffrosenberg Tan, a director at PT Sinarmas Sekuritas in Jakarta. The condition of the state budget will be critical this year, he said, adding that he prefers Pembangunan Perumahan and Adhi Karya.

The 2016-2020 infrastructure rollout in Thailand should benefit from the longevity of the military government and high public and private sector participation, said Maria Lapiz, co-head of research at Maybank Kim Eng Securities (Thailand) Pcl in Bangkok. She said she likes the high cash flow of Airports of Thailand and telecommunications company Advanced Info Service Pcl. Sino Thai Engineering & Construction Pcl. is also attractive, said Lapiz. The Thai government will provide 10 billion baht ($283 million) for its Future Fund, which it expects to grow to as much as 50 billion baht with money from private investors, pension funds, insurers and sovereign wealth funds. It’s an attractive investment alternative, but more details and pricing are needed before deciding to invest in the fund, said Yingyong Nilasena, the Bangkok-based chief investment officer of Government Pension Fund, which oversees around $22 billion of assets.

Infrastructure will be least vulnerable to the headwinds of a strengthening dollar and rising US interest rates, said Frederico Ocampo, chief investment officer at BDO Unibank, Inc. in Manila. Metro Pacific — which is involved in water, toll roads and electricity generation and distribution and is looking at bidding for airport projects — and Megawide Construction Corp. are among the best bets, he said. Metro Pacific is also the top infrastructure pick of Karen Hizon, an analyst at UBS Securities Philippines, Inc. in Manila. Some exposure should also go to construction company DMCI Holdings, Inc., cement firms will be a good play, while banks and property companies will also benefit, she said. Eduardo Francisco, president of BDO Capital & Investment Corp. in Manila, said his company was looking at structuring new debt instruments for infrastructure, but is waiting for rules to govern such issuance. The challenge for marketing the debt would be the absence of cash flow in the initial years of projects, he said.

Construction stocks will provide the biggest opportunity among shares in Malaysia this year, said Ang Kok Heng, chief investment officer at Phillip Capital Management Bhd. in Kuala Lumpur, whose Phillip Master Equity Growth Fund has beaten 94% of its peers over the last five years. He said he favors mid-cap stocks like George Kent Malaysia Bhd., Hock Seng Lee Bhd. and Kimlun Corp. as they have better return potential, especially when they win large contracts relative to their size. Some 96 billion ringgit ($22 billion) of new and ongoing infrastructure contracts will be awarded over 2017 and 2018, Loong Chee Wei, an analyst at Affin Hwang Investment Bank Bhd. in Kuala Lumpur, wrote in a Jan. 16 note. Loong maintained an overweight call on Malaysia’s construction sector and his top buys are Gamuda Bhd., Sunway Construction Group Bhd., WCT Holdings Bhd. and Gabungan AQRS Bhd. — Bloomberg

Philippine builders are among investors’ top picks on prospects of accelerated government spending. A view of the Pasig City skyline — BW File Photo