KUALA LUMPUR (Sept 9): The FBM KLCI index is expected to remain at the current level until the end of the year, according to UOB Asset Management (Malaysia) Bhd.

At 12.30pm, the 30-stock KLCI fell 0.44 point or 0.02% to settle at 1,870.65.

UOBAM Chief Investment Officer Francis Eng said his "top picks now would be the beneficiaries of the Economic Transformation Programme such as construction, oil and gas and property sector."

Eng said this in reply to reporters' questions on UOBAM's target for KLCI this year.

The lack of volatility in the Malaysian stock market is seen a factor contributing to better returns for investors.

UOBAM CEO Lim Suet Ling, who described Malaysia's capital market as a "boring market as it is very flat", nonetheless said funds are returning to the country after the initial
selldown following the US quantitative easing tapering.

"Malaysia's capital market has a great opportunity as the volatility is not there and could offer a better investment return.

"Furthermore, our market is neither expensive nor cheap as compared to other markets in the region," Lim said

On Malayia's monetary policy, Eng expects Bank Negara Malaysia (BNM) to futher normalise the overnight policy rate (OPR) by raising the benchmark interest rate by another 25 basis points (bp) in the near term.

He said the rate hike was expected to take place within the next 12 months.

BNM had raised the OPR by 25 bps to 3.25% last July. The central bank's next Monetary Policy Committee (MPC) meeting will be held this September 18.

Today, Eng said the OPR normalisation would not have a significant impact on the market.

On the goods and services tax (GST)to be implemented by April next year, Eng said it would definitely affect the comsumption index.

But the impact would be offset by the external side such as the rising export and import activities.

"We foresee the comsumption index will be softening after implementation of GST but it will be mitigated by external factors," he said.