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Debt securities remain sound investment in 2014, analysts say

ASSET-MANAGEMENT firm Aberdeen sees stocks with higher returns-to-risk ratios than US Treasuries as the better choice for next year, since they are protected from rising interest rates to a certain degree.

Meanwhile, Kasikorn Asset Management forecasts interest rates in this country remaining stable until the second quarter of 2014, though they could change in the second half. The company also suggests investment in debt securities of no more than two years' maturity, where the returns will better than from other assets.

Pongtharin Sapayanon, securities investment analyst at Aberdeen, said that after the US Federal Reserve starts to taper off its quantitative easing, it would result in more investments in the United States, leading in turn to increased US Treasury yields. In any case, new debt securities are still viable investments.

Additionally, debt securities or stocks that give spreads above the yield of US Treasuries are worth investing in as well, because they have something akin to a protection against damage from an upward adjustment in yields to a certain degree.

Chatchai Saroetaprirak, assistant managing director of KAsset, said Thailand's policy interest rate should be stable at 2.25 per cent until the second quarter of 2014, and could rise in the second half. Whether the rise is big or small will depend on the state of the Thai economyIf the current political situation drags on and affects the recovery of the economy, that could affect the central bank's consideration on whether to relax the policy rate.

But in the short term, Thai debt securities are still viable for investment because at present Thai bonds' yield curves are quite steep, he said.

Investors themselves would suggest short-term securities or those with maturity of no more than two years, a duration that would still provide decent returns. "Other than debt-securities funds, the real-estate fund is one of the better choices for investors looking for consistent return," he said.


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