The Minister of Finance of the Republic of Indonesia, Sri Mulyani Indrawati some time ago stated that the projected economy in the third quarter of this year would reach minus 2.9 percent. This confirms that a recession is certain in the near future.
This recession was caused by many things, such as monetary tightening by many central banks, the effects of the Ukraine-Russia war, the zero-Covid policy in China, to high inflation caused by soaring food and energy prices that hit a number of countries, especially Europe and US.
This condition triggered the policies of a number of central banks to combat soaring inflation by raising interest rates. This policy is considered to be contrary to post-Covid-19 economic recovery efforts.
In fact, World Bank President David Malpass asked governments in many countries to be wary of the risk of stagflation, bearing in mind that the threat of recession is becoming increasingly real.
So, under these conditions, what investment instruments are suitable to choose from?
1. Cash is The King
Financial Planner Advisor Alliance Group (AAG) Indonesia Dandy has stated that the possibility of a recession in the near future will certainly affect the market.
He said to be prepared for this situation, it is better not to be too greedy in making decisions, including choosing investment instruments.
According to Dandy, cash could be an option. Because, cash is a long-term investment instrument that will not be too affected when a recession occurs.
"Because cash is certain that money will not go anywhere and can be prepared when a recession does occur," he said, quoted from CNN Indonesia, Sunday (9/10/2022).
2. Bonds
Bonds are medium-term and long-term bonds that can be traded.
Specifically for bonds, you can invest in this instrument by taking bonds with a fixed coupon (FR-Fixed Rate series). That way, investment is maintained even though there is a risk of a recession.
3. Stocks
Dandy said that stocks are still an attractive option for investing during a recession. With a note, must choose issuers that are resistant to economic downturns.
"For issuers themselves, usually those who are more resistant to the impact of the recession have strong fundamentals, like those in LQ45, for example," added Dandy.
The LQ45 index is a stock market index on the Indonesia Stock Exchange (IDX) which consists of 45 companies that meet certain criteria. Like, included in the top 60 companies with the highest market capitalization in the last 12 months.
Then, it is included in the top 60 companies with the highest transaction value on the regular market in the last 12 months, has been listed on the IDX for at least 3 months, so that it has a good financial condition.
4. Gold
Dandy said gold could also be the top choice. Because, gold itself is a safe haven asset. Generally, when the economy is down, gold prices tend to rise. This has been proven during the crisis due to the Covid-19 pandemic.
At that time, many investors diverted their money into gold, so the price went up. This can be used again by investors in the event of a recession.
"When we reflect on the conditions that occurred during the Covid-19 pandemic, many people flocked to divert their funds to gold, as a result the price of gold rose during the pandemic because of this," said Dandy.
5. Mutual Funds
OneShildt Consulting Financial Planner Imelda Tarigan believes that even though the threat of a global recession is becoming more real next year, Indonesia will not be too affected.
This is because Indonesia's macroeconomic fundamentals are still relatively better than those of superpower countries such as the US and Europe. Therefore, for investment instruments, you can also choose sectors that support domestic economic circulation, such as mutual funds, especially fixed income.
Apart from being able to support the global economic cycle, according to Imelda, this investment instrument also has good prospects in the next two years.
"Less volatile, the prospect after the next two years is still positive, the return is still higher than inflation," said Imelda.
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