Investment Strategy in an Uncertain World: Cautious but Opportunistic

Jakarta, KOMPAS.com — Global uncertainty triggered by geopolitical conflict, a surge in world oil prices, and foreign outflows from equity markets has placed investors under considerable challenge in determining an investment strategy. Arief Cahyadi Wana, Managing Partner and Founder of PT Ashmore Asset Management Indonesia Tbk, said current market conditions mean investors cannot rely on optimism alone when making investment decisions. He added that the relevant strategy now is to combine caution with the ability to capture opportunities, noting that the global situation is characterised by unpredictability from both economic and geopolitical perspectives.

“I’m sorry, I cannot speak loudly that I am very positive or very optimistic because the situation we are facing today is full of uncertainties,” he said.

Arief noted that pressure on the stock market remains quite substantial. He said the stock index had fallen more than 3 percent in intraday trading, and the day before had also weakened fairly deeply.

He argued that this indicates investors need to be more selective in portfolio management and should not merely chase short-term market gains.

In implementing an investment strategy, Arief said his team regards world oil prices as one of the main factors determining the direction of the market going forward. He stated that the surge in oil prices since February was triggered by the Iran–Israel conflict and rising global geopolitical tensions.

According to Arief, higher oil prices pose the biggest risk to the stock market because they can affect inflation, interest rates, and corporate profitability. He said they do not expect oil prices to return to low levels in the near term.

“We see that oil prices are unlikely to revert to USD 50 or USD 60 per barrel,” he said. “We have conducted several simulations and looked at several oil shocks that occurred over almost the last 45 years, which show that it takes between six and seven months for oil prices to normalise,” Arief explained.

He added that this situation forms an important basis for determining investment strategy, especially for the stock market. “In my view, this is very important in understanding how we also approach investments,” he said.