Corporate bonds recommended amid sluggish equity market

Padermpob Songkroh, deputy managing director of Bualuang Securities, said his company was suggesting customers to invest in corporate debentures, particularly those rated "A minus" or above. These instruments offer more than 5 per cent, which is more than 2 percentage points above government bonds of the same maturity.

"Amid the current market conditions, highquality corporate debentures are the choice," he said.

However, due to the falling interestrate trend, once corporate bond yields drop to less than one percentage point above government bonds - as expected in the second half of this year - customers would be recommended to shift from three to fiveyear bonds to shortterm bonds or bonds with less than one year left to maturity.

Once gold trading in the futures market starts on February 2, investors should also trade gold futures as an alternative investment, Bualuang Securities is suggesting to its customers. Customers already investing in the futures market or the Thailand Futures Exchange's SET 50 futures would likely be attracted to gold trading.

Physicalgold traders are also a target group as Bualuang Securities has held training courses across the country for them. Some of them are also interested in investing in the bond market, Padermpob said.

Bualuang Securities forecasts the SET Index to hover around 350490 points in the first half of the year, with earnings per share expected to fall by 3.3 per cent year on year at the 350 level and by 5 per cent at 490.

With interest rates continuing to head south in the first half, stocks in interestsensitive sectors, including property, domestic consumption and commerce, would be worth a look.

For the second half, the SET Index is expected to peak at 590 with earnings per share of 5 per cent and pricetobook value at 1.2 times.

Padermpob believe the bourse will rally at the end of the second quarter to the third quarter in anticipation of an economic recovery next year.

With that scenario, Bualuang Securities recommends investing in banking in the second half, but Padermpob still does not believe that commodities will turn around.

Yesterday, Bualuang Securities introduced its new president, Pichet SithiAmnuai, who will take office on February 1. Yarnsak Manomaiphiboon, the outgoing president, will become the company's executive director and adviser. Yarnsak insisted that the role change was for personal reasons.

Pichet said Bualuang's total market share this year would rise to 5 per cent from 4 per cent last year, while its share of the derivatives business will rise to 5.2 per cent from last year's 4.7 per cent.

While onestop service has become a more and more common strategy among securities firms, Bualuang said it would also pursue this direction this year with a wealthmanagement concept.

The company would like its employees to be more than stockbrokers and capable of recommending other kinds of investment to clients.

This year, Bualung Securities aims to boost its income from investment banking to Bt120 million, up from Bt90 million last year, by focusing on mergers and acquisitions. Its target for private fund assets under management this year is more than Bt14 billion, up from Bt11 billion last year.

Bualuang Securities also plans to kick off a securitiesborrowingandlending business next quarter.