Mortgage Stocks and Bonds to Anticipate Recession

Worried About the Recession? Your Portfolio can Help

      Economists and governments asked investors and businesses to prepare for the threat of an economic recession that might occur.

Economists and the government have asked investors and businesses to prepare for the threat of an economic recession that may occur in 2023.

Recessions are caused by a chain of events in an economic system, such as a financial crisis, supply chain disruption, or world event.

A recession can also be triggered after a period of inflation. When inflation rises, a recession can set in, leading to layoffs, and higher interest rates. (investopedia.com)

During a recession, stock prices usually plummet. The market can be volatile with stock prices swinging wildly. Investors react quickly to any clues, news, and data — good or bad — and a flight to safety could lead some investors to pull their money out of the stock market entirely.

As the economy heads into recession, many investors are concerned about falling stock prices and the impact it will have on their portfolios.

At the same time, you may hear reports of a decline in housing sales and construction, an increase in the unemployment rate, and shrinking economic output.

But what do house building and output depreciation have to do with your portfolio? And, in addition to all these risks, how has the recession affected you as an investor?

These signs are part of the bigger picture, which defines the strength of the economy and shows whether the country is in a period of recession or expansion. In order to understand the state of the economy at any given time and how this affects the stock market, you need to start with the business cycle. Typically, a business cycle consists of four distinct periods of activity, each of which can last for months or years.

Due to the turmoil in the financial markets that began to occur in Semester II/2022, financial analysts stated that the threat of uncertainty conditions must be handled with caution.

In times of uncertainty, liquidity needs are very important, both for fulfilling the necessities of life, helping families, seizing business opportunities, and even taking advantage of the existing momentum.

For those of you who have securities in the form of stocks or bonds, these assets can be used as collateral for liquidity fulfillment by utilizing the Pawn Securities product or better known as Pawn Shares.

Pawning Securities Facility is a credit facility to customers within a certain period of time with the guarantee of ownership of shares and or script less bonds which are listed and traded on the Stock Exchange.

In this way, those of you who need liquidity can get credit facilities to take advantage of the bullish momentum in the financial market.

Pawning Securities can also be done as one of the efforts to reinvest in other investment portfolios in capital turnover for extension, intensification, or business diversification.

You can also use the Pawn Securities facility for consumptive or productive needs, such as the purchase of operational vehicles, as well as payment of short-term debt.

The requirements for Pawning Securities are quite simple, you only need to pledge a portfolio in the form of stocks and bonds. However, stocks that can be used as collateral are only stocks that are listed in a certain index, or stocks that have a predetermined haircut ratio. (depending on each country's policy)

In addition to stocks, you can also pledge your government bond portfolio. You can also make a sale of collateral to pay off the loan. In addition, the loan can be rolled over as long as the financial securities meet the criteria, you can also top-up as long as the ceiling is there.