Dr Hurriyah El Islamy’s advice on Alternative Investments in AsianInvestor’s event

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Dr Hurriyah El Islamy’s advice on Alternative Investments in AsianInvestor’s event

“Alternative Investment” should not be that. They are called alternative, not because they are supposed to be presented as “the alternative” or “second” choice, rather because they are not the asset class people usually consider as “mainstream” investment. Although, again, what considered as “mainstream” today may not be limited to stocks, bonds or cash.

Last week, in Singapore (Pan Pacific Ballroom I and Ballroom II), I was asked to share my view, whether it is now the time for alternative investment, given the unprecedented level of uncertainty, volatility, (interest) rate hikes, inflation is looming if not already happening in most countries, recession, etc.

The rule of thumb: do not put all your eggs in one basket. Diversification is key. It is important during the better time; it is more important when we ride the turbulence where risk mitigation and management become more crucial (although, in my perspective, these are must, at any time).

I am a person who sees the glass is half full not half empty. There are great opportunities during the challenging time. We just have to do it right, don’t simply follow the crowd or fall for the hypes. Do not speculate either.

When liquidity is limited, people are more willing to sell assets below market price. There are also people out there who see the glass half empty and prefer to exit or the circumstances force them to do so. Whatever the reason may be, it is during this time that one may have access to good assets at “favourable” price. That, when properly done, will translate into higher margin.

In that session, I offered this simple advice: stick to these two:
1- invest in necessity;
2- create sustainability.
In so doing, do not fall for the hypes and never speculate!

Necessity could differ between individuals or entities. I used BPKH, my former institution, to illustrate the point. While investing in “hotels” is not usually recommended given the current market situation (hotels are not generally considered as necessity or essential), for BPKH it is, if we talk about hotels in good location near haram in Makkah. The demand is clear, over 5.250 million Indonesians have registered and awaiting their turn for hajj and more than a million are expected to perform omra each year. So investments in good assets for the size not exceeding the demand is no brainer.

But one cannot stop there: part away with money and do nothing further. One should create sustainability for the investment to ensure optimal return. If the governance isn’t that great yet, improve it. If the environment aspect isn’t properly addressed yet, attend to it (giving quality service pays off). If it does not have social impact yet, do the necessary so it will create real value to the society. Create sustainable ecosystem for the investment.

Stick to the necessity, create sustainability, do not fall for the hype and never speculate! Stick to those, en sha Allah it won’t fail.

Thank you  for having me.

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