Market Correction? Stay Calm, Moduers!
Market corrected more than 6% today (9/3), what happened? What caused the steep decline in the market today? What do you need to do in current market situation?
Let’s read through! 😊
What are the causes?
Corona Virus (COVID-19) and Slow Down in Global Economy
Fear of COVID-19 outbreak, which has infected more than 100 countries and almost 4000 people, still gives negative sentiments to the market. Due to high impact on China economy caused by COVID-19, likewise Indonesia economy is also affected. This is mainly due to China economy contributes 17% of the global economy. Aside from that, China is one of Indonesia’s international trade partner (export-import) and one of Indonesia’s biggest investor. Moreover, tourist from China is also one of the highest in Indonesia. Hence, the slow down in China’s economy due to COVID-19 is predicted to have an impact in slow down of Indonesia’s economy of approximately 0.19%-0.29%. In addition, COVID-19 is predicted to slow down global economy by -0.41% (Source: Bloomberg and The Guardian).
Fall in Oil Price
The steep fall in oil price of more than 30% has given another negative effect to the market. Aside from the effect from COVID-19 that has reduced the demand for oil, the OPEC meeting that was held on Friday (6/3) failed to sustain the agreement of oil production cut. Based on law of economy of supply and demand, price of goods will decrease if the increase in supply is higher than the demand. This caused further negative sentiment in Indonesia market because Indonesia is a commodity country and weakening of oil price would give negative impact on other commodity sectors such as coal.
So, what do you need to do in current market situation?
Do not panic and stay invested!
Stay invested and choose Mutual Fund that suits your investment horizon and financial goal!
For you who invest in long term, you could invest in Equity Fund since the drop in current market situation could be considered as an opportunity to enter. Current JCI level is the lowest since January 2017.
However, for you who invest for short term, you could invest in Money Market Fund that gives lowest risk compared to other fund types. Need to be noted that Money Market Fund that are offered in Moduit still gives one year average return of 5,73% (data per 6 March 2020).