Remember that strong January? Well, February saw a deep correction in the markets, reflected in the Rupiah’s drop, as foreign investors sold off Indonesian assets.

‍How so?

A weak Rupiah limits foreign investors' upside and profits. With limited sentiment to strengthen the Rupiah, foreign investors took profits or limited their losses, driving foreign outflow from our market. This situation mirrors June last year, when the Rupiah traded at its all-time low of approximately 16,500. This outflow has created very attractive entry points for long-term investments, essentially making stock prices quite attractive.

Our analysis

We understand discouragement during times like these. However, we see market downturns as opportunities for long-term growth. Steep corrections often precede sharp rallies and price recoveries in the near term. While market volatility concerns you, we believe it presents valuable opportunities. Simpan actively manages your portfolios, meticulously selecting stocks to relieve you of navigating these fluctuations.

What drives our conviction?

  • The JCI is currently valued similarly to when COVID-19 drove its crash in 2020. Despite this, we believe that our economy is not the main culprit.
  • Currently, we agree that Indonesia’s economy is showing some weakness. We recorded our lowest inflation in decades. However, we do not think the economy is as weak as in 2020 and 2021.
    • Back then, weak consumption, massive layoffs, and an overall weak economy fueled the crash.
    • As of Q3-2020, the unemployment rate was 7.07%. As of Q3-2024, it improved to 4.91%, its lowest since 2019.
    • The economy fell by -3.49% in Q3-2020. As of Q4-2024, our economy grew by 5.02%. In a ‘weak’ economy, we managed to grow by more than 5%.
    • Put simply, the current economy is in a better shape than during covid years. Most importantly, the economy’s fundamentals do not justify JCI’s recent ‘crash’.

What you can do

  • Consider building or adding to your Simpan Sustainable Equity Fund holdings now. 
  • Dollar-cost averaging helps mitigate volatility.

Remember, long-term investing in equities can yield substantial returns, and corrections can be valuable entry points.

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