KEY POINTS:
One of the most hotly tipped sectors for this year is good-quality corporate bonds - those backed by famous and substantial local businesses - not finance companies, Guinness Peat Group chairman Tony Gibbs says.
And Russell Investments' Alister van der Maas says as with any investment, corporate bond buyers have to be wary and understand what they're buying.
Last year's finance company failures should have taught people to "read the fine print".
Investment manager Gareth Morgan says the end of easy credit ups the ante for New Zealand companies' competitiveness in what they're producing to generate growth. It is to companies producing goods competitively for which there is demand and high return that he will look to invest.
"I look for businesses with real earnings - not earnings coming from revaluing assets - which aren't absorbed in capital expenditure."
It's a "discerning" investing environment, says Morgan, in which you have to be "on your game - different from when all ships are rising on the tide and you can't really make a mistake".
Companies with insufficient equity will disappear and their assets will be swallowed by a creditor with a stronger balance sheet.
Philip Hunter, investor services director at sharebroking and investment banking firm First NZ Capital, says as company reporting season kicks off next month, investors will try to gauge how far through the recession the country is before confidence returns.
In the meantime, they should maintain a diversified portfolio reflecting their risk profile with a view to increasing their equity holdings over the year.
