Fixed income to remain key investment opportunity

KUALA LUMPUR: Malaysian investment companies are cautiously optimistic that the local fixed-income market will remain as a key investment opportunity in 2014 amid expectation that Bank Negara may raise interest rate in the second half of this year.

UOB Asset Management (M) Bhd director and head of fixed income Chang Kang Shyang said the fund manager expected the central bank to announce new a interest rate which would be an increase of between 0.25% and 0.5% (25 to 50 basis points) from the current 3%.

“However, since the market is adapting very well to the situation by making some changes in their portfolios, we think that it should be okay,” he said.

Chang was speaking to reporters after a briefing on Asian fixed-income outlook and the launch of UOB Asset Management’s new product, the United Trigger Fund.

Chang said Bank Negara was not expected to increase the rate aggressively as it might hurt the market, which is already facing high household debt.

“The rising interest rate is not good for the bond market but basically you need to adjust your portfolio as it will earn you higher return,” he added. — Bernama