The Jakarta Post
Indonesia’s current market rout caused by the COVID-19 pandemic has provided a lucrative entry point for investor as stocks prices are now relatively low compared with prior to the outbreak, asset manager Schroders Indonesia has said.
“It’s like a sale is happening in the stock market,” Schroders Indonesia investment director Irwanti said during the webinar “Investing in stocks: Best strategies in volatile times”, part of The Jakarta Post’s webinar series “Jakpost Up Close” on Wednesday.
“Corrections normally generate long-term gains,” she said. “If you ever spot a long-term gain, you will be able to make a lot.”
The Jakarta Composite Index (JCI), the main gauge of the Indonesia Stock Exchange (IDX), has lost almost 21 percent of its value so far this year despite gaining 10.5 percent in the last month following global and domestic market routs in March. The index gained slightly by 0.03 percent on Wednesday to 4,987.78.
“Short-term volatility will remain,” Irwanti said, adding that COVID-19 related news, primarily on a vaccine or cure, would drive the market going forward. However, this should not discourage Indonesians from investing in the local stock market.
“Know your asset options and their risks and returns,” she said. “Invest for the long term and take a gradual investment approach because corrections are normal and provide investment opportunities.”
Despite the market rout, Schroders Indonesia, whose assets under management reached US$662.6 billion as of last year, is of the view that several stock sectors on the IDX are still resilient amid the volatility. These sectors are consumer goods, health care and telecommunications.
Meanwhile, the severely impacted sectors are banking, retail, tourism, property and infrastructure.
“The consumer sector is among those that are less impacted as it provides people’s basic needs as well as essential services to the public amid the pandemic,” Irwanti said.
A rising health-conscious trend has made the healthcare sector more resilient, while the telecommunications sector was among the less badly impacted sectors as people have been working from home to abide by the social-distancing policies, she said, causing people to depend more on telecommunications services.
All sectors in the IDX have suffered deep falls ranging from 10 to 32 percent so far this year, bourse data showed on Wednesday. The property, real estate and construction sector suffered the most as its value has plunged 32.5 percent year-to-date.