For nearly a decade, we almost always seeing oil
prices to rise steadily until around US$ 100 per barrel, except on 2008 which
it dropped to US$ 45, but later went up again to the range of US$ 100 – 120 per
barrel. Entering 2015, oil prices began to fall and.. all of a sudden, it is now
on the level of about US$ 30 per barrel. The question, what happen? Does the decline
in oil prices related to the decline in the stock markets in China, United
States, and also the Jakarta Composite Index in this early of 2016?
‘Qualitative Value’ of Stocks
As an investor, I regularly read the Berkshire
Hathaway Annual Letter written by Warren Buffett, which usually published in
January or February each year, to gain a lot of investment wisdom directly from
Buffett himself. In the latest edition of 2014, Buffett shared his experience
when acquiring See's Candies, a
manufacturer of candy, sweets, and chocolate, in 1972, which after a few
decades later, this investment successfully generate huge profits for
Berkshire.
Elnusa
The Jakarta Composite Index (JCI) began its
journey in 2016 through a bumpy road. When this article was written, the index
is still dropped 1.5% in year to date. Although the decline is still much
better than the decline in China and United States, where the Shanghai Index and
the Dow Jones fell 18.0 and 8.2% respectively, but several stocks in the oil
and gas and mining sectors had fallen significantly, in line with the decline
in price of oil to as low as US$ 30 per barrel. One of the stocks, Elnusa (ELSA), recently closed at Rp200
per share, dropped almost 20% since the beginning of the year.
After the Despair, Then What?
Last August, precisely August 24, 2015 when the Jakarta
Composite Index (JCI) dropped 4% in a single day and closed at 4,164, and triggered a moment of panic
selling, I wrote an article entitled Between Euphoria and Despair. In the article I presented several phase of the period
of bear market, namely denial, bull trap, return to ‘normal’, fear,
capitulation, and finally, despair. And by referring to the fact that JCI had
tumbled significantly from its peak, ie 5,500’s until reached 4,100’s, and also
has passed through several phases ranging from denial to fear (or
capitulation), then at the end of the article, I ask, are we in the phase of despair yet?
Impairment of Rupiah = Crisis of 1998? Maybe Not
Indonesia experienced a severe economic crisis in 1998,
which was preceded by the fall of Rupiah against US Dollar since August in the
previous year (1997). And currently, as the Rupiah continues to dropped from
Rp9,000’s to now Rp14,000’s per USD, some people may ask: Will we see the
crisis like in 1998 once again?
About ASEAN Economic Community..
ASEAN Economic Community (AEC), is an integration/unification
of economic activity of the member countries of ASEAN (Association of Southeast
Asian Nations), where trade and import-export activities between countries,
including the movement of labor and investment, are no longer constrained by country’s
regulations (or is still constrained, but the regulations are much looser than
before). For example, if you go to Singapore and came home to Indonesia with a
souvenir, you may have to pay import duties at the airport in Indonesia, so
that some people may be unwilling to buy goods from abroad. But after this AEC
applies, the duty tariff can be lowered, or even removed altogether.
2015 Evaluation: A 'Grown Up' Market
In evaluating the investment performance in last
year of 2015, most of analysts and investors in the Indonesia stock market
usually only focus on the fact that the Jakarta Composite Index (JCI) had been dropped
significantly, in this case about 13% year on year, and it makes 2015 as a bad
and difficult year. However, there are several reasons that 2015 was actually
one of the best years in the history of the development of the capital market
in Indonesia. Related to this, I’m comparing 2015 to 2008, ie the year in which
the stock index also fell significantly (JCI also dropped in 2013, but the
decline was only 1%).
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