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‘Crazy rich’ Indonesians’ arrests spotlight investment perils – Al Jazeera English

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Medan, Indonesia – Indonesian influencers Indra Kesuma and Doni Salmanan lived the kind of lives most people can only dream of.

On his now-deleted Instagram, 25-year-old Kesuma, aka Indra Kenz, regularly posted pictures of himself posing next to luxury cars and sporting designer watches and clothes.

During an appearance on the TV show, Crazy Rich Indonesia, in January, Kesuma, from Medan in North Sumatra, regaled the audience with stories of buying $30,000 T-shirts, while Bandung-based Salmanan, 23, bragged of gifting $100,000 to an online gamer simply because he had nothing better to do.

Kesuma and Salmanan attributed their extravagant wealth to successful trading on Binomo and Quotex, respectively, binary option trading apps that allow users to bet on a stock’s rise or fall within a strict time limit to be in with a chance to win a fixed monetary amount.

But while Kesuma and Salmanan claimed to have made their fortunes on the apps, dozens of others say they lost huge sums in what Indonesian authorities are calling an elaborate financial scam.

In February, just a month after discussing his self-made wealth on national television, Kesuma traded his designer T-shirts for an orange jumpsuit when he was arrested by Indonesian police. Police arrested Salmanan the following month.

Both men now face charges of fraud, online gambling, money laundering and violating Indonesia’s Electronic Information and Transactions Law (ITE) by spreading so-called fake news. At press conferences in March, Kesuma and Salmanan apologised for their actions, expressing hope their arrests would serve as a warning to other would-be investors.

Kesuma’s lawyer did not respond to a request for comment, and Al Jazeera’s efforts to reach Salmanan’s legal representative were unsuccessful.

Doni Salmanan appeared on the TV show Crazy Rich Indonesia earlier this year [File: Instagram @donisalmanan_real]

“We need to look at more than just Indra Kenz and the Binomo case,” Adinova Fauri, an economist at the Center for Strategic and International Studies (CSIS), told Al Jazeera.

“The practice of illegal online trading platforms in Indonesia keeps rising, even though the government keeps trying to block them.”

According to police reports lodged by the alleged victims, the problems with the apps began as soon as users signed up using affiliate codes provided by Kesuma and Salmanan.

“The ‘trading’ mechanism that Binomo used was clearly unreasonable from the start,” Vinsensius Sitepu, a financial journalist and private investor, told Al Jazeera.

“The data varied between users, the time span to choose whether stock prices would go up or down was ridiculously short. There were user accounts that just closed suddenly, funds couldn’t be withdrawn, and so on,” Sitepu said.

“The Binomo system seemed designed to make users keep losing.”

At a press conference last month, authorities announced they had identified 118 alleged victims so far who had collectively lost more than 72 billion Indonesia rupiah ($5m).

Police have also seized luxury cars and assets from Salmanan and Kesuma worth some $8.25m.

“In reality, Doni Salmanan did not trade on the website and was only an affiliate to benefit from members,” Brigadier General Suheri said at the press conference.

‘Greater the profit, greater the risk’

According to investigators from Indonesia’s cybercrime unit, Kesuma and Salmanan received about 80 percent of the money that users lost when they signed up for trading accounts using the affiliate codes provided by the two men.

Before the arrests, Kesuma attracted more than 200,000 members to a Telegram group used to bring in new Binomo users, while the Quotex Telegram group operated by Salmanan had more than 25,000 users.

“The police were negligent and slow in how they handled this, even though things had been wrong for a long time with Binomo and other rogue applications,” Sitepu said, adding that many people were particularly vulnerable during the pandemic as they were “out of work or not making as much money as they usually would”.

“They should have been shut down at a much earlier stage.”

Zamroni Salim, the head of the Research Center for Macroeconomics and Finance at the National Research and Innovation Agency (BRIN), said the case showed the need for Indonesians to take greater care when investing.

“The case against Binomo and Indra Kenz arose because of complaints from the public who felt that they had lost money because of this kind of investment. But this didn’t need to happen,” Salim told Al Jazeera.

“There is a saying in trading: Only invest the amount of money that you can afford to lose. This is one of the fundamentals of investment, that in the name of investment there must be risk. The greater the potential profit, the greater the risk, but Indonesian people tend to be easily lulled by the lure of grandeur, especially if it is conveyed or advertised by celebrities and public figures.”

Fauri, the CSIS economist, said binary trading sites have had particular appeal due to their association with influencers living seemingly lavish lifestyles.

“Public figures advertise those products, and it attracts people and combines with a lack of digital literacy,” he said. “It has to change. They should only advertise if the product has a permit or licence from Financial Services Authority of Indonesia (OJK) or Commodity Futures Trading Regulatory Agency (Bappebti).”

While Salmanan and Kesuma are facing up to 20 years each beyond bars, authorities appear powerless to do much about the apps themselves, which do not have a physical presence in Indonesia.

While the police investigation is still continuing, it is unclear to whether the platforms were involved in Salmanan and Kesuma’s alleged fraud.

Binomo is registered to Dolphin Corp, a company in Saint Vincent and the Grenadines in the Caribbean, while Quotex is registered in the Seychelles. The ownership of the companies remains unclear.

Police say Salmanan and Kesuma have refused to confirm whether they are working for anyone else, although they suspect more people are involved.

In 2021, Binomo was the fourth most downloaded finance app in Indonesia, although it has since been blocked and is no longer available on Google Play Store or the Apple App Store.

Quotex has also been blocked in Indonesia along with hundreds of similar binary trading sites. Binomo and Quotex did not respond to requests for comment.

“As long as the company is still standing somewhere, Binomo will still be able to continue its activities,” Sitepu said. “Apps like these are very hard to stop without cooperation between countries.”

“If we think of Binomo as a snake, it needs to be beheaded. What we’ve got so far is only the tail.”

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German Hydrogen Utility HH2E Wins Investment From UK Firms – BNN

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(Bloomberg) — London-based private equity company Foresight Group Holdings Ltd. and investment firm HydrogenOne Capital Growth Plc acquired stakes in HH2E AG and will help the new hydrogen company to develop green energy projects in Germany. 

Foresight and HydrogenOne have taken minority equity stakes in HH2E and agreed to co-invest in energy projects, the German company said in a statement on Monday. HH2E — co-founded by Andreas Schierenbeck, former chief executive officer at utility Uniper — plans 2.7 billion euros ($2.8 billion) of investment to build 4 gigawatts of green hydrogen and green heat-production capacity by 2030. 

“Germany has one of the largest industrial and manufacturing sectors in the world,”  said Schierenbeck. “Leaders in these sectors know they must secure the supply of energy, control energy costs, and find low- or zero-carbon solutions soon. HH2E will be producing green hydrogen located close to the industries that need it.”

Germany aims to get almost 100% of its electricity from renewables by 2035, and is racing to expand green energy capacities as it tries to pivot away from reliance on Russian natural gas. The country plans to install 10 gigawatts of electrolyzer capacity by 2030 to scale up the hydrogen market. 

Russia’s Invasion Supercharges Push to Make a New Green Fuel

The two British investment companies will provide most of the capital needed for HH2E’s first five green hydrogen projects, which will need a total of 500 million euros in development costs and have an initial capacity of 500 megawatts. Some of them have the potential to be expanded to 1 gigawatt, according to Schierenbeck. 

HH2E seeks to produce green hydrogen cheaper than grey hydrogen — made from natural gas — in the coming years. It is “clear that the economics of green hydrogen are better than the grey and blue, as the latter two depend heavily on the cost of natural gas and carbon,” said Schierenbeck.

“This financing agreement enables a massive acceleration of our development plans,” said HH2E co-founder Mark Page. 

©2022 Bloomberg L.P.

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It's an ideal time for adopting the Number One defensive investing strategy for retirees – The Globe and Mail

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The best way to protect your retirement savings from a market crash is to safely park enough money to cover your income needs for two to three years.

Until 2022, safe parking has meant dead money. Now, with interest rates rising, you can adopt this strategy with a smile on your face. Rates were high enough in mid-May that you could build a three-year ladder of guaranteed investment certificates earning an average return of as much as 3.8 per cent.

A feature of every stock market crash I’ve seen as a personal finance and investing writer is the senior distraught over the idea of having to sell hard-hit stocks and equity funds to cover the minimum annual required withdrawal from a registered retirement income fund. In both the 2008 and 2020 crashes, the federal government allowed a 25 per cent reduction in the minimum RRIF withdrawal for those years. But that’s only a limited benefit and, anyway, seniors shouldn’t depend on the feds for help with their investment portfolios every time stocks plunge.

The best strategy for protecting a RRIF against inevitable stock market declines is to keep a reserve of money to draw from when selling stocks or equity funds would lock in a serious loss. At bare minimum, have enough money for one year. At best, try for two to three years.

You could keep this money in a high interest savings account, where rates have recently climbed to between 1.5 and 2 per cent at best among alternative bands and credit unions. If you have the financial flexibility to lock money into a GIC, the best one-, two- and three-year rates in mid-May were 3.35, 3.95 and 4.1 per cent, respectively.

Those rates were available from alt banks that sometimes don’t offer RRIF accounts. An alternative is to see what GIC rates your broker offers for RRIFs. Online brokers have unusually competitive GIC rates right now – not as high as alternative GIC issuers like Oaken Financial and EQ Bank, but close.

With a three-year GIC ladder, you invest equal amounts in terms of one through three years and invest each maturing GIC into a new three-year term. If a two-year term seems a better fit for you, try that. They key is to have cash safely stowed so that you can give your stocks time to recover from the next stock market decline.

— Rob Carrick, personal finance columnist

This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.

Stocks to ponder

Colliers International Group Inc. (CIGI-T) On May 3, the global real estate services and investment management company reported solid first-quarter earnings results and increased its 2022 outlook. Yet, high inflation, rising interest rates and concerns about a potential recession continue to weigh on stock markets, including Colliers, which is down 23 per cent year-to-date. There has been opportunistic buying on this price weakness, with the company repurchasing nearly 1 million shares in March and April. As well, the chief executive officer recently invested over $17-million in shares of Colliers. Should investors consider buying shares as well? Jennifer Dowty looks at the investment case.

The Rundown

Now is the perfect time to slay these five investing myths

During volatile times like this, it’s important not to let myths sabotage your investing plan. Some of these myths are so pervasive and ingrained in our culture that many people don’t question them. They reflect the way investing is portrayed in the media, from financial websites and business channels to movies and the evening news, where dramatic events – especially ones in which people make or lose a lot of money – get the most attention. John Heinzl presents five of the most common investing myths. Become familiar with them so that, to paraphrase Rudyard Kipling, you can keep your head while everyone else is losing theirs.

Also see:

Tim Kiladze: The human flaws that fuelled this market crash – and why they keep failing us when investing

Rob Carrick: A five-step plan for dealing with the sad fact that almost every investment is falling lately

Gordon Pape: Seeking places to hide during the current investing storm

Know your history before buying the current dip

Investors who bought stocks in the depths of the great financial crisis in early 2009 were quickly rewarded. So were those who bought the dip in the early days of the COVID pandemic. Will that same bounce occur again? Don’t count on it. Share prices will no doubt eventually recover from their recent weakness – they always do – but reaping the rewards is likely to require more patience this time around, says Ian McGugan.

Also see: Signs of market bottom elude investors after steep selloff

Bank stocks are reflecting a lot of risk. Now let’s look at the reward

Canadian big bank stocks have tumbled more than 14 per cent over the past three months, as concerns about an oncoming recession rattle equity markets. The potential rewards of buying into this dip are becoming hard to ignore, says David Berman.

Why the Canadian dollar is poised to surge

Forex traders beware: economist David Rosenberg and his team believe any dip in the Canadian dollar should be bought. In fact, they think the loonie is considerably undervalued and will soon zoom up to 83 cents (U.S.). Here’s why.

Also see: ‘TINA’ still driving hedge funds’ bullish dollar view

Why this portfolio manager sold his Magna stock (and wishes he’d bought Disney)

Money manager Denis Taillefer is holding a lot of cash, awaiting what he calls ‘peak interest rate hawkishness.’ Brenda Bouw speaks to the senior portfolio manager at Caldwell Investment Management Ltd. to find out what he has been buying and selling.

Others (for subscribers)

BlackRock’s Rieder: Summer rally coming in U.S. bonds but bull market likely over

The most oversold and overbought stocks on the TSX

Monday’s analyst upgrades and downgrades

Monday’s Insider Report: CEO and CFO are buying this high-yielding REIT with a 32% gain forecast

Globe Advisor

Major asset managers want bigger share of thematic ETF market as number of offerings increase

Reasons why the tech stock crash may be far from over

Are you a financial advisor? Register for Globe Advisor (www.globeadvisor.com) for free daily and weekly newsletters, in-depth industry coverage and analysis, and access to ProStation – a powerful tool to help you manage your clients’’ portfolios.

Ask Globe Investor

Question: I have stocks in my TFSA and in my cash account. There’s one investment in my TFSA that I think will pay off but will take longer to do so than some in my cash account.

I’m thinking of transferring the one in my TFSA out in kind, creating plenty of room so that I can transfer in some of the investments that are closer to the finish line. What do you think of this strategy? – Chantal M.

Answer: Your logic puzzles me. The main objective of a TFSA is to maximize the tax-sheltered profits on your invested money. But your suggested approach would do the opposite. Let’s look at the two sides of your equation.

You say the stock in the TFSA looks promising but will take longer to pay off. But as its value grows in the TFSA, those gains will be tax-free. Moving the stock to your cash account will mean all the gains from the time of the switch will become taxable when you sell.

Meantime, you want to move stocks that are “closer to the finish line” into the TFSA. To what end? If they are that close to your sell objective, most of your gain is already taxable. Remember, when you make a contribution in kind, the Canada Revenue Agency considers that as a sale at the market price on the day the shares go into the TFSA. You are taxed accordingly. If you really plan to sell soon, moving those shares into the TFSA will not be of much benefit.

You need to consider the potential profit of each stock, not from the time you bought it but from the day it goes into (or comes out of) the TFSA. Those with the highest long-term growth potential should be in the plan.

–Gordon Pape

What’s up in the days ahead

Bonds have been producing terrible returns this year, but many investors still want to hold them as a stabilizer in a balanced portfolio. Are short-term bond funds the way to go? Gordon Pape will have some fixed income advice.

Click here to see the Globe Investor earnings and economic news calendar.

Share your investing successes (or misfires)

Are you interested in being interviewed about your first stock purchase? Globe Investor is looking for Canadians to discuss their experience as part of this new, ongoing feature. If you’d like to be interviewed, please write to: jcowan@globeandmail.com with “My First Stock” in the subject line and include a short description of your first stock purchase.

Compiled by Globe Investor Staff

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New Zealand Plans More Digital Skills Investment to Bridge Gap – BNN

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(Bloomberg) —

New Zealand will make a new investment in the digital technologies sector with the aim of increasing skills development and encouraging local companies to market their talents globally.

The government will allocate NZ$20 million ($13 million) over four years from this week’s budget, Minister for the Digital Economy David Clark said in a statement Monday in Wellington. The spending will support the growth of the Software-as-a-Service community and take a new a marketing initiative led by industry in partnership with government, to the world, he said.

“Through this new funding, the SaaS Community can build its momentum further and expand its network,” Clark said. ‘It will also support the delivery of short courses for digital skills development.”

The government wants to address a shortfall of investment in technology education that has created a skills gap and forced several local companies to shift offshore to find the talent they need. A report from the OECD highlighted a weak pipeline of advanced information technology skills while Wellington-based game developer Pikpok this year opened a studio in Colombia to tap talent there that isn’t available at home.

“We know for the digital sector to grow, it needs access to the right people,” said Clark. “Historically, there has been a ‘skills mismatch’, but the key to future success is training our domestic talent with the right skills, and encouraging New Zealanders to participate, whatever their background.”

Changes to the immigration system will help alleviate some of the immediate pressures on industry, with key roles including software engineers entitled to fast track residency, he said.

©2022 Bloomberg L.P.

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