EXPERT INTERVIEW: Experts advise to invest in corporate bonds and repo

/IRBIS, Ruslan Dzubaylo, July 30, 2008/ -July 29, 2008 KASE index reached it minimal position 2297.29 point for the recent 52 weeks, overcoming mid- term support level - 2400 point. According to earlier expert interview, index falling may continue. In this relation, July 28 - 29, 2008 IAFM IRBIS conducted regular interview on investment strategies under conditions of "bear" market and absence of short trades and derivative instruments in Kazakhstan. Experts offered different investment decisions on this question. Vitaliy Kan, analyst of external analysis and forecasting administration of BTA Bank JSC considers that for the current moment we should focus at corporate bonds of the most reliable and financial stable issuers. Evgeniy Popov, the director of assets management department of ALMEX Asset Management JSC has the same reference to conservative investors. Besides, according to Mr. Kan, the thing that role of stock market as the sources of funding began to increase under the current of conditions of restricted bank crediting tells in favor of this strategy. At that, Bakhtiyar Bakas uly, analyst of Verny Capital JSC thinks that investors with "rude nerves" may retain their securities. And those investors, who expect further decreasing, should fix their losses now and play on decreasing on markets of other countries. Evgeniy Popov has the same viewpoint: "Long-term investors (more than 1 year) should take wait and see attitude, purchasing shares on local decreasing. Short-term investors should enter Kazakhstan ADR and GDR, where is high liquidity and short sales". There is also another viewpoint: under the conditions of falling market and absence of short sales, the simplest and the most trusted and effective way of money investment is investment in instruments of monetary market. Repo operation, according to some analysts, is most acceptable under current conditions, in terms of risk and yield correlation. "At first, on sharply increased credit risk level, repo as the secured form of crediting allows assets compensation in case of issuer's default. Secondly, repo yield is higher than bank deposits` yield. And thirdly, there is no income tax on autorepo`s yields on KASE", - financial analyst of Asia Broker Services JSC, Shakhnazar Tleuliev thinks. At the same time, Mr. Tleuliev warns from opening repo operations on long terms, because in this case risks connected with issuer's default will considerably rise. The head of branch analytic of Subsidiary organization of Joint Stock Company BTA Bank BTA Securities JSC Nurlan Rahimbaev offers interesting, rather reasonable and profit strategy for investors. He thinks that investors should focus at certain investment ideas and wait for suitable moment for opening positions on the market. According to him, high activity in merger sphere in bank and metallurgical sectors will be the main ideas, which will manage to push up share quotes. Reference Recently, "overnight" repo operations yield exceeds 5% APR, within 7 days term - 9% APR, from 7 to 14 days - 10.5% APR. Corporate bond yield varies from 7% to 27% APR, depending on term, "covenant" and issuer quality. The value of corporate bonds` indexes KASE_BY at the current moment makes 10.05% APR. Yields of government bonds on secondary market vary from 5.5% to 20% APR (on indexed on inflation rate long-term bonds). Inflation for last 12 months made 20.0%. Investors could earn 10% for two days for the news that South Korean bank Kookmin bank purchases Bank CenterCredit JSC. News on Arab investors purchasing Kazkommertsbank JSC aroused immediate growth of this bank's (KKGB) common shares by more than 15%. Information is presented within the frames of weekly expert interview on acute questions of Kazakhstan and international stock market development, made by IAFM IRBIS. Analysts of Asia Broker Service JSC, ALMEX Asset Management JSC, Subsidiary organization of joint stock company BTA Bank BTA Securities JSC, VISOR Capital JSC and Centras Securities JSC participated in interview. IAFM IRBIS expresses its gratitude for participation in this project. For detailed information please contact us Tel.: (727) 237 53 41 [2008-07-30]