SURVIVING INVESTMENT DURING COVID-19 PANDEMIC

by Dewi Tamara

Covid-19 spread and became pandemic has killed more than 1 million people in worldwide. It implied the social and physical distancing in the society. The rapid spread and the long incubation process had made leaders around the globe put various policy such as lockdown, circuit breaker, and PSBB (large scale restrained mobility). The reducing transportation, business activity and education routine declined sharply economic activities surrounding it : transportation online and offline, restaurant, sport facility, cinemas and malls. By the time, this reducing business activity will also impact finance activity including investing.

To discuss any optimistic and strategy on how to survive investment in this pandemic situation, on 15 April 2020, BBS Master Program has conducted webinar titled “Surviving Investment during Covid-19 Pandemic” with Mr Taye Shim, the president director and CEO of PT Mirae Asset Sekuritas Indonesia, which also alumni of MM Executive. The moderator of this event is Ms Dewi Tamara, Deputy Head of Program of MM Executive and organized by Marketing Communication Division, Binus University.

The discussion attracted more than 200 participants and actively discussed about the presentation from Mr. Shim. The figures of global economic outlook by OECD declines and put Indonesia on 4.8% growth of GDP. The impact on tourism was direct due to the Covid-19 issue, prohibiting all kinds of travelling purposes. The airline industry is projected to suffer a loss comparing to last year. Based on the historical data about the similar pandemic, SARS (2003) and MERS (2015), it took 6-7 months for airlines industry to recover from this impact.

The figures on global manufacturing will also decline due to China’s slowing down growth from its previous 6% to 4.5%, a moderate prediction. The demand for oil also will go down, following by the commodity price and USD index. The pharmaceutical industry also follows to decline due to 97% ingredients coming from China, as exports and import declines, protectionism could be step to bigger effects.

Retails and consumer products also will suffer as consumers reduce the frequency of visiting the stores. The price of coal as “black goal” would be free fall and hammered other commodity prices.

The pressure would be to central banks around the world, because the policy of bailing out, stimulus, quantitative easing would be a priority to be done to reduce the market distress. Again, uncertainty about how long and how much are not easy to reply nowadays. The central bank and authorities will do ‘whatever it takes’ to keep and defend the economy in their countries.

What is the best advice about investing around this pandemic time ?

As we deal with very unquantifiable risk, any projections due to Covid-19 contagion would be unrealistic and unpredictable. This will violate the time of value calculations. The pricing mechanism will be determined by supply and demand. Then the price would be very much determined by the fear of selling off any securities all over the world.

As in every crisis there will be an opportunity, retail investors use this opportunity to make large buying and give V-shaped bound on graphics. Those investors take advantage to the heavily discounted share prices and heavily dislocated valuations of stocks.

So the advice to investment are : always use idle money, investing is not short time horizon, always do the homework for technical and fundamental analysis, and be futurist.