FBMKLCI to hover at 1,600 by year end: Citi

Bursa Malaysia has the potential to receive more foreign funds, said
Citibank Malaysia's Head of Investment Strategist and Research (Wealth
Management Products) Steven Yong today.

He said foreign
participation in Bursa Malaysia had increased to about 28 per cent now
from 23 per cent at the end of third quarter 2011 but still below the
usual peak of between 33 and 35 per cent.

He said the inflow of funds would depend on what policy the government was implementing.

"They
are in for longer term prospects. If the foreigners are confident in
the government's policies, they will come in," he told a media
conference on the 2012 retail investment outlook here.

Another
important factor would be the outcome of the general election which was
expected to take place in the first half of 2012, he said.

Yong
said the FBM KLCI could hover close to 1,600 points by year end. The
stock market benchmark index ended today's morning session at 1,522.32
points.

"There is still a lot of uncertainty until we get to the
middle of the year. What (policies) will be implemented this year will
affect the market," he said.

He said the FBM KLCI beat his 2011 year-end forecast of 1,450-point level to stay above 1,500 points due to foreign buying.

For this year, his preferred sectors included oil and gas and utility.

Yong also expected the ringgit to appreciate against the US dollar based on fundamental perspectives.

"Fundamentally,
due to the expected growth of our economy which is five per cent
compared to two per cent for the United States, the ringgit will
appreciate," he said.

In the shorter term, however, the weakness
of the euro would benefit the US dollar and would have an impact on the
performance of the local currency, he sadi.

In the next three
months, Yong expected the ringgit to be in the range of 3.2 to 3.23 per
US dollar and strengthen to 3.1-3.12 in the next six months. -- Bernama