Just enjoy the market volatility

JAKARTA. Director of Research and Investment at Bahana TCW Investment Management Soni Wibisono has shared his analysis on the impacts of the United States of America (the US) presidential election to Indonesia’s stock market to KONTAN, as follows:

Ahead of the US presidential election on 8 November, the US stock market will be more volatile. It will be difficult, even for the professional investors to time the market.
At a certain level, this will also affect to Indonesia’s stock market.

However, the US presidential election will not have significant impacts to the market, thanks to the solid fundamentals of the domestic companies and economy. Therefore, if the investors invest in stocks and bonds, just enjoy their volatility. They even can top up when the market is corrected, if it is necessary.

Indeed, the US presidential election will not have significant impacts to Indonesia’s market. However, on the D-day of the election, market will express its agreement or disagreement to the result of the election. The market players may have an extreme manner in responding to the result. However, it is only a temporary reaction. In this case, the investors will get back if the value is already raised and the price is relatively cheap.

Likewise, in case of euphoria and the stock prices rise, the increase is going to happen only in a few days. After that, the price will fall back to the fundamentals. So, what can we measure from the sentiment? This seemed almost impossible.

I believe that whoever wins the US election will not be relevant to the domestic investors. The direct impact of the US policy will not have significant impacts to Indonesia.

However, it is predicted that the US investors will hunt for shares of automotive, technology, and healthcare sectors if the candidate of Democrat Party wins. Conversely, investors will hunt for the shares of defense and consumers sectors, as well as the shares of export oriented companies.

It is not entirely accurate that gold is ‘the safe haven’ for investors ahead of the election. In this case, the gold may not necessarily bring profit for the investors after the election.

Thus, investors should still monitor the fundamentals of the company and economy. For Indonesia, I am still confident that stocks and bonds are still the best investment instrument for investors to raise funds.

(Muhammad Farid/Translator)