The month of December saw that markets rallied to end the year for the final push after a very tumultuous year. Is this just a temporary relief or the start of another rally? Market analysts seems to be divided on that.
Major news for December are focused mainly on Madoff, a founder of a New York hedge fund firm being accused of running giant ponzi scheme (using new investor’s money to pay off existing investor’s money). It is estimated that about USD 50 billions worth of investor funds were lost by the 70 year old.
The US Government finally approved a USD 13.4 billion in government loan to be given to General Motors and Chrysler in an effort to save them.
Market headlines are full of news of major layoffs and expense cutting from around the world that
contributes to the global uncertainties
Overall, the market performance has been:
|
Asia Ex Japan |
BRIC |
US |
US Non Financials |
Japan |
Europe |
| Jan-Des 2008 |
-53.30% |
-54.96% |
-38.49% |
-41.89% |
-42.12% |
-45.89% |
| Des 2008 |
8.75% |
5.15% |
0.78% |
2.18% |
4.08% |
0.54% |
· BRIC – Brazil, Russia, India and China
Some events happening in Indonesia:
Money Markets
- The Bank Indonesia has started to reduce interest rates (BI Rate currently at 8.75%) and analysts are still expecting a further slight reduction in interest rates in 2009.
- Though this will push down deposit yields, the general uncertainty in market conditions for 2009 will push investors into safe instruments such as money markets.
Fixed Income
- Bank Indonesia has started to cut interest rates, thus we are beginning to see bond prices going up
- The rise in bond prices are usually followed by profit taking actions by the investors due to their belief that the market will likely trade in ranges in the foreseeable future
Equities
- The equity market managed to end higher compared to the last few months with the JCI Index ending the year at 1355.4
- Market analysts are divided in their opinion over these but most attributed it to the “Santa Claus” effect in which market tends to rally at the end of the year. Analysts further cautioned that the uptrend seems unjustifiable and purely based on market sentiments. It remains to be seen to which market will go after this but most agreed that the market will be trading in ranges for the remainder of the year
Funds Strategy
- Money Market Fund – Overweight in time deposits
- Fixed Income Fund – Neutral with medium term duration
- Equity Fund – Neutral in equity
- Balanced Fund – Underweight in equity, neutral in time deposits, and moving towards fixed income
- USD Managed Fund – Neutral with no change in weighting
- For further details, please review the monthly fund fact sheets