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• How Syailendra Responds to the IHSG Decline

How Syailendra Responds to the IHSG Decline

March 04, 2020

Below is an analysis of the IHSG from Agustinus Candra, Head of Business Alliances and Retail at Syailendra, as covered by Kontan TV on 2 March 2020.

In summary, broadly speaking, the market is experiencing a shift in trend. Whereas in 2017 to 2019 the market was overshadowed by the trade war between the United States and China, in 2020 it is more about anticipating the Corona outbreak spreading across various countries.

From 2020 year to date, the index has declined 11.69% due to concerns about a slowdown in the Chinese economy as a result of the Corona outbreak. China's economy itself has been slowing since Q4 2019, from 6% to 5%. Why is this happening? Because if China slows down, other countries' economies also slow down.

It was also noted that there is a statement from Indonesia's Minister of Finance that if China slows down by just 1%, this will affect 0.3% - 0.6% of GDP. Therefore, if GDP slows down by 1%, Indonesia's GDP level is estimated to be 4.5% - 5%.

Governments everywhere will certainly not remain idle in addressing the slowdown. Stimulus measures will undoubtedly be prepared in each country, and China itself has already released substantial liquidity of 1.2T.

Indonesia has also taken fiscal policy measures, such as discounts on airline ticket prices.

So what can investors do when the IHSG is falling like this?
The first is to extend your investment horizon. Second, consider that at current valuations the JCI is at 13.1x PE, so existing stocks can become cheaper, allowing investors to hold or increase their position using the cost averaging method – buying gradually until reaching the bottom line, then waiting for the market to rebound.

And finally, of course, evaluate yourself with the statement

Don't put all your money in one basket

This has proven true in various scenarios. For example, in 2018 - 2019, when equity values did not see much appreciation, investment in fixed income and bonds could achieve attractive returns.