We remember an old proverb: “Never Put All Your Eggs in One Basket”. Using this proverb as an investment philosophy, diversification has proven to work in managing investment risk. In modern investment theory, each company is exposed to systematic (market) risk, which should be managed and reduced, if not eliminated, by constructing a portfolio of different investments or stocks across several industries.

Not everyone is equipped to efficiently manage a diverse portfolio of stocks profitably. Hence, a new investment product was devised to allow investors a viable alternative to investing in the equities market. The Stock Index was created as a representative portfolio or “basket” of stocks having common characteristics, with the index derived from the respective weighted averages of all and/or a representative number of stocks listed under the same categories, e.g. the Exchanges where they are traded, nature of business, market capitalization, liquidity, etc.

Using the Stock Index (”spot”) as an indicator, the Stock Index Futures was formulated to facilitate transactions in the capital market. Technically, investing in Stock Index Futures is not riskier than investing in equities since its aim is to reduce the incidences of investor risk. The nature of margin trading encompasses a much larger scale of investment so that even with a lower investment base, the potential for investors to a much higher profit is possible vis-a-vis possibilities for loss. Therefore, margin trading is recommended only for more sophisticated investors.

However, with careful analysis and prudent capital management, this risk can be effectively managed. Pacific 2000 has the experience and expertise to manage these investments efficiently. We can provide prudent guidelines and useful techniques in the management of your capital. In addition to the potential to derive profits from any market price movements, Stock Index Futures can also be used as an effective hedging tool against any fluctuations in a client’s equity investments.

Some of the most popular stock index futures are Hang Seng, Nikkei, Dow Jones Industrial Average, NASDAQ, S&P 500, and NYSE Composite. Asian investors generally prefer participating in the Nikkei and Hang Seng Index because of the time zone and familiarity with market conditions. Pacific 2000 is capable of handling both local and international stock index futures for diversification, hedging, and speculation.

For Indonesian investors, Stock Index Futures trading also brings the global capital markets closer to home. This investment product allows virtually everyone the opportunity to access more developed capital markets such as those in Japan, Hong Kong, and United States conveniently from where they reside.