World Buying Stock

Debt securities or the more commonly known as the bond is one of the investment instruments that are also traded in the secondary market Indonesia Stock Exchange (IDX).

Although it does not have the prestige such as product stocks, but bonds have interest in the product and its place in world capital markets.

In fact, if I may say, still a few who truly understand the mechanism of bond transactions on the trading floor products. When in fact, the product of bonds is one investment that can provide huge profits with minimum risk level.

In a column this portfolio, detikFinance tried to introduce a simple description of this product.

Bonds is one type of fixed income securities categorized. Bonds are debt instruments that contain an agreement or contract willingness of the borrower (issuer / issuer) to make regular payments to the lender (investor) in a certain period.

Of course, the entire principal amount will be refunded at the end of the period of the agreement. Well, the interesting thing is, these bonds can be traded and transferable during the period of repayment period.

Characteristics of bonds divided into four categories, namely the bond issuer, priority, coupon rate of interest and redemption options.

In terms of the issuer, bonds are classified into two types ie Government Bonds and Corporate Bonds. Both have a different characteristic.

Government bonds typically have a lower interest coupon rate which would give yield to maturity (YTM) is lower as well. However, the level of risk may be said almost nothing. Therefore, these bonds are fully guaranteed by the government, so the unlikely event of default.

Corporate bonds usually provide a level of higher interest coupon which would provide a higher YTM anyway. But the level of risk is higher, because the private companies always have the possibility of default. Therefore, corporate bonds are usually accompanied by attractive features that are commonly known as the sweetener (sweetening).

In terms of priority, the bonds are divided into two types of bonds senior and junior bonds (subordinated bonds / subdebt). In government bonds this classification does not exist.

The difference between the two types of bonds is the priority when there is a condition of default (default). If a corporation’s default, the lender’s senior bonds will be prioritized for payment.

While the junior bonds get second place after the payment to holders of senior bonds

is completed. Therefore, the coupon rate offered at the junior bonds are usually higher than senior bonds, because the assumed level of risk is greater.

From the side of the coupon interest rate, in general there are three types of coupons are valid in Indonesia is a fixed interest coupon, coupon and zero coupon interest floater.

Provide a fixed interest coupon rate of return (return) which remained since the beginning of the bonds issued until maturity. So that the calculation of interest to be paid and the bond issuer for bond investors YTM calculation becomes easier.

Coupon interest floaters provide returns that vary according to the reference interest rate. Typically, the benchmark interest rate on SBI (Bank Indonesia Certificate).

Zero coupon bonds do not give a coupon interest payable, but rather the provision of discounts on the initial bond offering. For example, company A is issuing bonds worth Rp 1 billion, then the price to be paid by investors, you name it, amounting to Rp 900 million.

Later at maturity, the issuer will pay the full amount of Rp 1 billion. So investors will get a coupon payment in advance.

In terms of redemption options, generally consisting of call options, put options and conversion options. Call option (call option) is a right held issuer to buy back (sort of buy-back) at a certain period before maturity bonds.

Conversely, a put option (put option) is a right held by bond investors to sell back its bonds to the issuer of the bonds. However, the put option is rarely granted, because it is not profitable for the issuer.

Investing for the community should become a lifestyle trend. No longer limited to just think ‘saving’ and put the funds on deposit that supposedly most secure investment instrument. Begin turning to the stock. Why?

Simple indicator is the increase in the Composite Stock Price Index (CSPI), which reached 46.13% to a level of 3703.512 during 2010, and is predicted to continue in this year.

According to research results of PT Bahana TCW Investment Management, the strategy of investing in 2011 is to minimize the allocation of liquidity, either cash or deposits. The problem of excess liquidity to keep interest rates remain low, so the acquisition can not cover inflation.

Let’s look at interest rate movements on the type of investment deposits. Since 2005, the government cut fuel subsidies and the allocation of the global crisis that terrible incident in 2008, causing deposit rates continued to decline. Until the acquisition of interest on the bonds can not fight inflation, mainly of food commodities and education.

Indeed during the 1998 crisis, the government became fully ensure public funds are deposited in the deposit. So forget the notion that the deposits as a profitable and safe investment.

Trimming the fuel subsidy is causing inflation and cause interest rates rise. But it turns out the positive impact, especially foreign investor confidence, actually increased.

Furthermore, not only foreigners who buy government bonds, but also domestic banks. Proceeds from sale of state bonds has raised additional funds of banking, even exceeding the purposes for which credit has actually been increasing.

As a result, excess funds are collected in Bank Indonesia Certificates (SBI), and ultimately be borne by the central bank.

Bank Indonesia (BI) instrument makes interest rates as inflation control through the absorption of liquidity. If the rupiah liquidity is absorbed, there can be reinforcement that reduces the risk of inflation. During the height of bank money in SBI, the bank is relatively not so needy of public funds as reflected in relatively low deposit rates.

An alternative solution is to stock investing. Shares of commodity sector remains one of the main drivers of investment in the stock market. But the expectation of rising stocks will not last year.

“We think the expectations are the benefits to follow the historical average of 20%, according to the long term nominal GDP growth of Indonesia,” explained Director of Research and Investor Relations Investments on the type of bonds or corporate bonds also worth ogled. Investors can choose a corporate bond with a good credit rating, rather than government bonds. Treasury bond yield mapping for the tenor of 10 years, in late 2010 at 7.6% level. This figure is lower than the average 10-year inflation of 8.3%.

“Indeed, inflation in 2011 could be less than 8.3%, so the yield on Treasury bonds are very attractive. But investors should be alert to secure itself when inflation soared,” he said.

Other investment alternatives can be done in non-listed companies through private equity fund. Especially when the price of stocks and bonds are considered expensive, while the low-interest bonds awake.

The advantage to invest in private equity funds is the dividend. In addition, there is potential for greater profit when released into the market the company’s business capital as a public company.

Wealth Management is closely related to monetary policy taken by the central bank. Wealth management is strongly influenced by both market conditions and money market capital markets. Inappropriate monetary policy would reduce the value of existing property or can even spend the wealth that has been managed well in advance.

Nomination of candidates for Governor of Bank Indonesia by the President to the House some time ago, can not be separated from the expectation that they proposed to have the ability to produce a good monetary policy and has the capability commensurate with the implementing fiscal policy coordination to achieve the national growth rate (GDP) at once able to control inflation and the stability of the rupiah to the right.

Bank Indonesia as the central bank’s duty to make monetary policy (monetary policy) that could lead to:
1. Raising or maintaining the rate of growth of national economy. Certainly here need a close coordination with fiscal policy (Fiscal Policy), which was headed by Coordinating Minister for Economy and Finance Minister as the architect of the state budget. Raising the rate of economic growth (GDP) means to raise the level of national prosperity. This job requires intelligence and intellectual ability with an educational background of good monetary, as well as the ability to coordinate with the authorization holder of Fiscal Policy (Fiscal Policy) in calculating the exact rate of growth of the right to certain conditions.
2. Controlling the economy not to get overheated or otherwise not in a recession, by combining Monetary and Fiscal Policy. Necessary intellectual ability with a background of monetary theories in order to steer the economy through the bumpy road of economic growth called the business cycle. Also need to have knowledge about the mechanism of fiscal policy and the multiplier to coordinate the intellectual equivalent to the Coordinating Minister for the Economy and Finance Minister.
3. Controlling inflation through monetary policy. Inflation is too high will lead to poverty. The increase in income or salary or any of its fixed income, there is no point if the rate of increase is equal to the rate of inflation. Bank Indonesia as the holder of Monetary Policy (Monetary Policy) should be able to coordinate with the Coordinating Minister for Economy and Finance Ministry to control inflation. Because if not then the rate of growth has been achieved will be of no use and the longer the economy would lose competitiveness against overseas, unable to export, and the rupiah would be weakened (depreciated) and worthless.
4. Keeping the rupiah currency to remain stable. Without the ability of intellectual background of international monetary and finance fields, both theoretical and field experience, can be said to be rather difficult for someone to be able to tame the currency such as the rupiah to remain stable. Knowledge and experience in this field must exist. Without this kind of experience, we deserve afraid that the rupiah would be volatile (volatile without controls and without direction), let alone the general election was in front of the eye.
5. Central Bank in this Bank Indonesia should be able to handle the commercial banks, rural banks, as well as other intermediary functions in the field of credit. Commercial banking and lending is only a small part in monetary policy. The ultimate objective of monetary policy held by Bank Indonesia is to achieve or maintain economic growth rates or in other words, the increase of national prosperity is directly, not solely make the regulation of credit.

mortgage rates go down and down it? Though the BI rate already dropped to 8.25%. Instead of BI’s benchmark rate for banks to determine interest rates both deposits and loans? These comments are often out of the community. Not only consumer lending rates, lending rates are also the same as working capital. Still have not seen any decrease.

Why did this happen?

Bank is an intermediary institution that is an institution that collects funds from the public (third party funds) and returned to communities in need through loans. Third-party funds in the form of savings, current accounts and deposits. Among the three products is usually the highest deposit interest rates is because there is a period of 1, 3, 6 or 12 months.

Determination of loan interest rates are influenced by many factors, including liquidity, interest costs (cost of funds) to fund a third party. Current deposit rates in the market is still in numbers ranging from 10% – 13%. Interest rates are not only offered by private banks that liquidity problems but also by the large banks are also a red plates bank liquidity problems that in fact no bandwagon to raise interest rates so as not to be abandoned customer deposits. Funds of funds is called expensive. This makes the bank has interest costs (cost of funds) high that interest rates are very difficult to be lowered.

One of the other alternatives in terms of anticipated shortage of liquidity is the Interbank Money Market (interbank). We recommend that banks with excess liquidity lend funds to banks in need so it does not happen again unfair competition in the market. But this seems not easy because the banks with more liquidity would not lend their funds because there is no guarantee the funds will be returned. During the bank’s funding needs are not met then as long as it also deposit rates will remain high and interest rates are also engaging high. Monetary authorities in this Bank Indonesia should take immediate steps for liquidity drought could be overcome so that the bank can re-run its intermediary function because the current credit as well so went along dragging.

Merchant Cash Advance

monetary policy will cause a decrease in the inferior almost all facets of life. Wealth Management is becoming increasingly difficult to apply. Monetary Policy in the context that we should look at the option of Bank Indonesia Governor candidates proposed by the President. We expect decision-makers and shapers in this country and especially in the House in order to realize the consequences of monetary policy is inferior. Thus, in selecting candidates for governor of Bank Indonesia over that proposed by the President: Raden Pardede or Martowardoyo Agus, decision makers can more clearly see it.

Indonesia’s economic future requires a Governor of Bank Indonesia with an intellectual figure to the capabilities in theory and practice, a fairly strong educational background in the field of monetary as well as local and international experience. Equivalence also has knowledge in the field of fiscal policy. Indonesia risking its economy to move forward amid increasingly fierce competition, and Indonesia have a chance to qualify as a considerable economy over the year 2010. Do not let these opportunities pass because one chose the Governor of Bank Indonesia are less competent, lest we produce an inferior monetary policy

With the task of Bank Indonesia as above, is almost certain that the task performed by the prospective Governor of Bank Indonesia is not an easy task. Besides the need to have a sophisticated intellectual background with a strong educational background in the field of international monetary and finance, must also have experience in the field of international economics and finance as well as the knowledge and skills in order to coordinate fiscal policy that is commensurate with the intellectual authority of fiscal policy in the Coordinating Minister for Economy and finance department.

Do not let the Governor of Bank Indonesia to make a spay Monetary policy multiplier effect of fiscal policy made by the Coordinating Minister of Economy and Finance Minister. Or conversely, do not let the Governor of Bank Indonesia monetary policy-making that caused the economy overheated due to the Governor of Bank Indonesia can not afford to see a strong multiplier effects that occurred from fiscal policy.

Thus we can say, the next Governor of Bank Indonesia must be someone who has the intellectual capability and educational background is quite strong in the field of monetary policy (in particular) and fiscal policy as an extra.

Then, the international experience of a Governor of Bank Indonesia shall be required, because the rupiah we fight in the international market. What can be understood and addressed locally often can not be applied internationally. Here required an economist by background. It’s not enough just knowledge of banking. Knowledge of the difference (disparity) international interest rates, the disparity in the level of international inflation, net of income disparity in the level of international inflation will be very decisive in making good monetary policy.

Without the abilities mentioned above, monetary policy is almost certain that we produce is an inferior monetary policy. The consequences of monetary policy is inferior is the occurrence rate of economic growth is inferior or always below the target so it can not provide adequate employment. A second consequence of monetary policy is inferior is always out of control inflation, meaning that although there is rising income levels, but always crushed out by inflation. The consequences of monetary policy is inferior the latter is weaker rupiah continued, so currency, we do not serve as a tool for store of value, means of storing wealth. Surely in the long run will damage the stock of money and stock markets.