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Wed 24 Dec 2008 05:01 PM

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Corporate bonds among best 2009 investments

Mashreq Capital chief talks about top opportunities in 2009 amid global crisis.

Corporate bonds will be among next year’s best investments as real estate and equity markets remain in the doldrums, the chief executive of Mashreq Capital has said.

“Things have fallen down to levels where it is difficult to think that they could really get a lot lower,” Abdul Kadir Hussain said of the region’s debt markets.

“In that environment, where interest rates and volatility are likely to stay low, you can easily get 10, 12, or 15 percent total return on the blue chip, stronger names.”

Kadir believes an economic recovery will start in the second half of the year, but that it will be gradual and – perhaps counter-intuitively – will begin in the country where all the turmoil began.

“I think in the second half of the year you should probably start to see some signs of recovery in the US, which will I think be the first country to come out of this global downturn.

“The primary reason for that is that they been the ones who have most aggressively targeted their recovery and thrown a lot of dollars and that should hopefully start to show in commodity prices and oil prices,” he said.

The sentiment driven nature of Gulf economies means investors are fairly bullish when oil prices and commodities are rising, but that the mood quickly sours when they are not.

To that end, the region’s stock and real estate markets will remain in the doldrums for most of 2009, according to Hussain. “You’re not going get a hockey stick. You had a pretty sharp slowdown,” he said.

“Towards the end of the year I would expect things to stabilise and we will start looking at some growth in asset prices both in the equity markets, and potentially in the property markets,” he said.

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