THIS SHOULD BE a year filled with opportunities for those who dream about getting a foot in the door of security trading. Because the volume of transactions is projected to soar, there will be a need for a bigger headcount at both frontline and back-office positions, said Ben Kwong, director of investment advisory, KGI Asia. He said that the company was hiring this year to strengthen its retail and corporate businesses. To enter the field as a frontline trading professional, a candidate must pass examinations required by the Securities and Futures Commission. Candidates should be mature and possess outstanding interpersonal, communication and presentation skills. 'Presentation skills are important,' Mr Kwong said. 'At KGI Asia, for example, some of our frontline staff have to introduce new products to corporate customers.' Although hailed as a good year, 2005 is not expected to be an outstanding one for the stock market, unlike last year, when investors poured in funds and watched profits grow. Mr Kwong said security trading houses and investors would have to take a more cautious approach this year. Market ups and downs would be expected, with stocks giving varying performances. 'The overall performance will not be too different from last year, but investors should not expect the market to fare as well as it did in 2004.' The goal this year should be to minimise risk rather than maximise return, and investors should adjust their strategy accordingly. 'For instance, in the short term, take profit when you see a 10 to 15 per cent rise in price. Liquidity is more crucial. Hold the cash and do the bargain hunting at low prices.' In addition, it would be a tall order for investors to pick undervalued plays this year, he said. 'Many of the stocks have already outperformed, hence the difficulty to select undervalued ones,' he said. One factor certain to dampen the market this year will be rising interest rates. As interest rates climb, global and local economic growth will inevitably weaken, Mr Kwong said. The gross domestic product is forecast to grow at 4 per cent this year, he said, compared with 7.5per cent last year. As a result, corporate earnings will probably shrink. Although an inflow of funds would mean that Hong Kong could refrain from following global interest rate trends, an outflow could not be ruled out. 'In the long run, the Hong Kong interest rate is expected to be in line with the global one,' Mr Kwong said. Despite the challenges, there are several positive factors that could keep the market buoyant. Mr Kwong said the opening of the much anticipated Hong Kong Disneyland in the third quarter would give tourism a boost and the local economy and the stock market a lift. As China implements macroeconomic policies to control its overheating economy, its relatively high gross domestic product growth of 8 per cent is good news for the Hong Kong stock market. 'We have seen an increasing number of mainland companies list in Hong Kong. If the China economy stays positive, overseas investors will maintain an interest in mainland firms listed in Hong Kong.' The fact that mainland players are allowed to invest overseas and the possibility that interest rates will rise in the mainland has had a positive impact on Hong Kong. Investors aside, this will also be a tough year for security trading houses, with competition intensifying. A brokerage competes with its counterparts and also with banks, which are usually perceived as stable, reliable and user-friendly to individual investors who can make payments and carry out transactions with relative ease. Brokerage services should therefore be tailored to attract investors. 'We provide our customers with a personalised service they cannot get from banks,' Mr Kwong said. 'At banks, the customer service officers have to deal with more than just stock-related products, and they may not have a lot of time to communicate with investors.' Venturing outside retail business was of equal importance. Mr Kwong said security trading players would have to do more for corporate businesses and introduce structured products. 'At KGI, we are looking to recruit more sales staff to strengthen both our retail and corporate businesses.' A structured product is a financial instrument designed to meet specific investor needs by incorporating special, non-standard features, including capital protection, warrant and traditional loan gearing, exposure to overseas equities, commodity hedge arbitrage and 'share index' style investment. Mr Kwong said it was not a wise strategy to compete on cheaper commissions or prudent to gain market share by taking in customers who wanted high-risk trading. 'Brushing up on the qualities of brokers and widening your product selections would be better tactics,' he added. With a fluctuating market expected this year, Mr Kwong saw tourism stocks as good buys in the first half of the year, mainly because of expected growth driven by the Disneyland theme park. Companies that depended on shop leasing for revenue would also benefit from tourism. 'Tourism will give a lift to consumer spending, and this will strengthen the retail businesses. With retail thriving, it will be easy for shop lessors to raise rents,' Mr Kwong said. He advised investors to keep their eye on industrial plays in the second half. Last year, industrial plays were affected by the rising cost of raw materials; this year, cost pressure will diminish and some companies will benefit. Meanwhile, red chip companies with expansion plans and initiatives relating to mergers and acquisitions should spark investor interest. 'Red chips in such sectors as shipping, containers and insurance are worth watching,' Mr Kwong said. Mainland firms in the raw materials and telecoms sectors were also good picks, he added. The demand for raw materials would be buoyed by the country's flourishing economy. China's telecoms industry would see initiatives that could be expected to keep related stocks afloat. The must-have qualities To break into the field, you should pass the examinations required by the Securities and Futures Commission. Candidates should be mature and have outstanding interpersonal and communication skills. Candidates should possess excellent presentation skills in order to introduce products of different kinds to sophisticated corporate customers.