News Flash 5 Januari 2009
2008 Investment Performance Flashback and Investment Opportunity & Strategy in 2009
Below is the 2008 investment performance flashback and investment strategy for 2009.
Question (Q): How is the investment condition during 2008?
Answer (A): During 2008, we have experience a global economic crisis that was started off by subprime mortgage in USA and directly impact the stock market and at the end the world economic is weakening. World’s stock market performance was fall by more than 30% and followed by the fall of commodity prices as the effect from low demand as the effect from world economic condition. The commodity price reduction has made the expectation for world’s inflation for 2008 and 2009 is lower. Therefore it gave chances to the world’s central bank to reduce the interest rate in order to maintain one country’s economic performance.
Q: How does it effect to Indonesia’s stock market and economic condition?
A: Stock market is the first sector that is impacted from the global economic crisis. Stock market, exchange rate, and obligation performance has reduced by 50%, 20%, and 10%, which was majority caused by the high selling pressure from foreign investors. Its impact to the economic was raised on the 4th quarter of 2008, which the export performance, especially export to USA, was reduced. Other sectors such as consumers, financial, and industry still give positive contribution as stated on emitent’s quarter report in Indonesia.
Q: What makes the drop of stock market performance in Indonesia?
A: As stated above, Indonesia’s emitent performance is not as bad as other countries’ (e.g USA). But their stock prices was drop quite significantly. Global economic crisis made the investors divert their high-risk investment to the low-risk investment such as US Dollar. In summary, the decreasing of stock market performance is not because our fundamental factors, but more on sentiment. In our opinion, current stock market condition is quite interesting for investors, especially for those who has a long term vision so you can buy investment asset on ”low” price.
Q: How about investment prospect in 2009?
A: Global economic condition will still move slowly in 2009 and effected to real sector performance in Indonesia although will not as bad as in USA. Several industries will earn some advantages from this condition, since the drop of commodity prices will also drop the global interest rate. Obligation market, emitent in low-class consumer, infrastructure, and financial institution will receive positive impact and become interesting investment medium in 2009.
Q: What strategy will you recommend in investment sector on 2009?
A: As an investor, moreover if you have a long-term vision, we will recommend you to have a financial planning before investing and also to set your investment objectives. After setting the objectives, you may choose investment asset that suit your objectives and risk profile. You may also need to diverse your investment to different type of asset to reduce the investment risk. The other way to minimize the investment risk is through “dollar cost averaging”.
Q: As an investor, what should we do to face this condition?
A: Price has fluctuated during 2008 and has influenced an investor’s value and portfolio composition. Therefore, we will recommend to review your investment portfolio whether it is suit your investment objectives:
- If your investment portion is still small, we will recommend to add your portion during this condition
- If the portion is enough, then we will recommend not adding it.
- If your investment portion is too big, we will recommend to consider your investment objectives.
Q: Is trading during this condition is recommended?
A: In theory, trading gives high return in a short term. However, the risk is also high. If you are good as “market timer”, high-discipline, own the mediums, you may use the price volatile through trading. For investor who doesn’t have those criteria, we will recommend you to be a long term investor. Because trading might reduce investment return because there will be transaction cost and high risk nowadays.
Q: Is ”switching” on this condition is recommended?
A: It depends on investor’s need. Every product has its own feature and objectives. So, you should look back on your objectives before you switch your investment. Since investment objective is for long-term, we may not let this condition (which might be occur only in a short term) change your long-term objectives.
Q: How to reduce investment risk in this condition?
A: Actually, market condition should not affect investment risk. But what may influence is how you plan your financial condition, such as:
- Has a long term objectives. Double interest concept will help investor to reduce investment allocation. Also, having a long term timing will help investor to face fluctuated market risk.
- Investment diversification. Every class of asset has it owns characteristics. Therefore, to have different class of asset or diverse you investment may reduce the investment risk.
- Regular investment. Regular investment also known as “dollar cost averaging”. It will not only reduce the investment risk, since you buy it in different prices, you will also make yourself discipline in investing, even during hard times.
- Evaluate your investment performance regularly, but not too often. Because it may influence your investment objectives. Our recommendation is to evaluate it every 6 months or 1 year. Because investment objectives will not change every day or every month.
Q: What is the meaning of ”double interest” concept?
A: Double interest concept is actually very simple and rarely implemented on our daily lives. A simple formula to know your investment term and interest rate per year needed in order to double investor’s money is using ”72 Formula”. To calculate them, 72 divided by investment term or interest per year. The result is the interest per year or investment term needed to double investor’s money. Example: If the investment term is 10 years, we will need approximately 7.2% interest per year or if interest rate per year is 20%, then you will need 3.6 years of investment term.
News Flash 26 November 2008
Commonwealth Bank of Australia (CBA) Performance As reported in last week’s Annual General Meeting in Melbourne, half year results for 2008/2009 will be adversely impacted by significantly higher first half provisions. These are driven primarily by exposures to ’Lehman Brothers’, ’Allco Finance Group Limited’ and ’ABC Learning Centres Limited’. There is no evidence of systemic credit issues, and overall credit quality in the Group’s consumer and commercial books remains sound. Despite current challenging market conditions worldwide, the underlying business performance of the Commonwealth Bank of Australia (”the Group”) remains strong.
The Group:
- Continues to hold an AA international credit rating – one of only 20 banks worldwide to do so
- Holds a very healthy AUD $66 billion in liquid assets
- Holds a 30% market share in household deposits, more than double its next Australian competitor
- Has had the strongest deposit balance growth during the past 12 months of all the Australian banks at 34%
- Has continued to increase its home loan market share in 18 consecutive months
- Has a tier 1 capital ratio of 7.5% (FSA equivalent of 11%), the highest of our Australian competitors and of most European banks
The Group continues to maintain a cautious approach in the current environment, with emphasis on maintaining strong capital, funding and liquidity positions.
While the Australian economy has been relatively resilient, domestic economic activity is slowing, but despite the slowdown, CBA Chairman John Schubert has reassured the market that CBA is outperforming its major peers in financial performance and will continue to do so.
Commonwealth Life Corporate Update
Click on below file to see Commonwealth Life and Commonwealth Bank of Australia's strength and performance in facing the global economic condition.
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News Flash 13 Oktober 2008
Trading on Indonesia Stock Exhange (IDX) resumed today, 13 October 2008. Investra’s unit price for today, 13 October 2008, will be calculated on Tuesday, 14 October 2008 and will be published on Commonwealth Life’s website as well as in the media on Wednesday, 15 October 2008.
News Flash 9 Oktober 2008
Q&A IDX Trading Suspension and its effects to Commonwealth Life
- Why did Indonesia Stock Exchange (IDX) suspend its stock transactions?
On 8 October 2008, the IDX composite index fell more than 10%. Suspension of trading is allowed under IDX operational procedures in order to minimize stock price fallout in extreme situations. So basically, this intervention was positive for the current market.
- How long will this condition occur?
The suspension policy is subject to government decision. We will update you regularly regarding this condition which has occurred only once previously - when IDX was subject to terrorist attack in September 2000. Suspension is never expected to last for much more than a couple of days.
- As an Investra product owner, what should I do?
To know what you should do, please review your risk profile and investment goal. Because Investra is a long-term investment, it would be wise for you to consider maintaining your investment for the future.
- When trading has been suspended, can I still withdraw, redeem, switch, top up, redirect, or reinstate my policy?
When IDX has suspended trading, we are unable to process any of the above-mentioned requests. The simple reason for this is that there are no available unit prices. However, any such requests received will be processed as soon as trading resumes.
- If I buy Investra while trading is suspended, will I still be covered under the policy?
Your life cover will commence when your policy is issued, because basically your life cover and investment are separate matters.
- Under this condition, what should I do for my policy renewal?
Your policy renewal should not be affected by this situation because you need to renew your policy to keep your cover. The transactions involving unit prices will be processed after IDX has resumed trading.
Statement First State Investment 8 October 2008
Statement First State Investment 9 October 2008
Announcement Indonesia Stock Exchange