UOB MOVES INTO MIDEAST BONDS

       A second fund is centred on Asian capital markets

       Strong economic growth and more flexible requirements on credit ratings have prompted UOB Asset Management (Thai) to invest in Middle East bonds.
       There are two mutual funds on offer. The UOB Middle East Bond Fund will invest in Qatar and Abu Dhabi, while UOB Smart Asia Recovery will invest in capital stocks in large Asian markets.
       CEO Vana Bulbon said the company had expanded its investment conditions as could now invest in bonds rated "AA-", while previously the rating had to be at least "AA".
       UOB has thus been able to expand investment to more countries. Between now and next Friday, the company is offering the UOB Middle East Bond Fund with a size of Bt1.5 billion. Of that, 75 per cent will be invested in Qatar and the rest in Abu Dhabi, the capital of the UAE. The investment period is four years and seven months.
       Standard and Poor's has rated the Qatari bonds "AA-"and the Abu Dhabi bonds "AA".
       An International Monetary Fund survey shows Qatar has the world's highest income per capita. Its gross domestic product (GDP) grew an average of 15 per cent annually between 2004 and last year. The country has no record of default, while its government budget has shown a surplus each year since 2000.
       Abu Dhabi possesses the world's biggest fund, worth US$875 billion (Bt29.86 trillion) and enjoys the third-highest GDP per capita, $63,000 in 2006. The Abu Dhabi government plans to turn the city into an economic centre.
       However, some investment risk does exist, because Qatar and Abu Dhabi both depend on oil exports and thus remain vulnerable to oil-price fluctuations. In the long term, they will less rely on oil, and the currency risk is fully hedged.
       Meanwhile, an equity fund called UOB Smart Asia Recovery is being offered between now and next Wednesday. It will invest in 14-18 capital stocks in large Asian markets excluding Japan for two years via a buy-and-hold strategy. Since the global economy has bottomed out and started to recover, it will not rebound sharply. UOB judges two years to be the right amount of time to make a profit.
       Both funds require a minimum investment of Bt10,000. Returns will be paid every six months for the bond fund.
       For the equity fund, investors can choose to receive dividends during the investment period or a lump sum at maturity.

       "The company has expanded its investment conditions as it could now invest in bonds rated "AA-", while previously the rating had to be at least "AA"."