KUALA LUMPUR: Maybank Investment Bank Bhd (Maybank IB) expects Bursa Malaysia to touch the 1,780 level by year-end, riding on the back of the recovery in global oil prices, favourable foreign exchange, as well as easing in foreign fund outflows.

The benchmark FTSE Bursa Malaysia (FBM KLCI) ended 1.62 points lower at 1,664.89 on Friday.

Its head of retail equities CK Lim said the global crude oil prices would continue to be traded between US$55 (RM244.2) and US$60 per barrel this year due to efforts by the Organisation of the Petroleum Exporting Countries (Opec) and non-Opec nations to reduce global crude oil supply, which would keep the price above the low of US$20-US$23 per barrel.

"This would benefit Malaysia, as its economy is closely-linked with the petroleum price, not to mention that US$55-US$60 per barrel is the breakeven level for oil producers," Lim said on the sidelines of the bank's market outlook for this year.

He also noted that foreign fund outflows would continue this year, however, the situation would not be alarming.

"The fact that Chinese foreign direct investments have improved from 0.3 per cent in the past three years to 3.0 per cent currently has helped to cushion the impact on Malaysia's economy," he added.

Meanwhile, on the external factors, Lim said politics and the central banks' policies would continue to be the key influencers on the financial markets.

"We expect elections to take place in France, Germany and the Netherlands, and everyone will also be watching closely the new United States President Donald Trump's next move.

On the foreign exchange, Malaysia Association of Technical Analysts president Nik Ihsan Raja Abdullah said the ringgit was expected to bounce back to the RM4.10-RM4.20 level against the US dollar by year-end based on technical evaluations.

"This is in line with fundamental views that we concur with Maybank. Looking back at the trend over the last two years after the US increased its interest rate, the dollar strengthened a little before easing gradually. Therefore, we expect a similar pattern this year, " he added.

Meanwhile, Maybank IB's top picks for stocks are from the construction and tourism sectors.

This is based on new major infrastructure projects relating to China's One Belt, One Road initiative, and expectation of higher tourist arrivals boosted by Visit Asean@50 Year, as well as the 2017 SEA Games and 2017 Asean Paralympic Games to be hosted by Malaysia. Bernama