KUALA LUMPUR: ING Funds Bhd expects the FBM Kuala Lumpur Composite Index (FBM KLCI) to hit 1,650 by this year-end, mainly underpinned by strong economic growth and mega projects under the Economic Transformation Programme (ETP).

Its CEO Datuk Steve Ong said the KLCI’s bullish performance would likely be supported by strong private and public consumption, as well as a possibility of the general elections before year-end.

“We believe the country has a robust GDP (gross domestic product) momentum and there is no reason to revise it downwards. As a result, we are also very upbeat on equities,” he told the media after a presentation on ING Funds’ active portfolio management service for retail investors yesterday.

ING Funds’ chief investment officer Phillip Wong said interest from both foreign and domestic investors had begun to return in recent weeks.

“This is because a lot of projects under the ETP would be fast-tracked and the Iskandar region story, which was underplayed previously, is also gaining recognition among investors,” he said.

Wong added that with the ringgit still in appreciative mode, liquidity had also increased, which in turn, would prop up the local bourse’s performance.

Ong said while inflationary pressures and rising oil prices would still present threats to the country’s economic growth, he did not expect the global economy to experience a double dip.

“We do not think that a global double dip will occur. Indeed, we have multi-faceted events happening in the first quarter of this year, ranging from the uprising in the Middle East to the earthquake in Japan.

“But, for a double dip to happen, it needs another huge systemic event to overturn the global recovery effort,” he said.

Nevertheless, Wong said given the volatile markets currently, equities that were either defensive or benefit from the ETP would be more attractive.

“For defensive earnings, we like traditional consumer product manufacturers. We are also looking at counters that are likely to see strong earnings growth this year including those from the construction, oil and gas and plantation sectors,” he said.

Ong said given the active portfolio management services, the portfolio of assets under ING AMP Plus had managed to stay in the positive territory in the first quarter this year.

ING AMP Plus won the “Malaysia — Most Innovative Product” award by Asia Asset Management, a Hong Kong-based monthly journal on Asia Pacific institutional fund markets recently.

“We are on track to achieve a 1.5% return for the first quarter of this year, when the KLCI was either in negative territory or flat,” he said.

The ING AMP Plus, which managed some RM160 million of funds, invests in a basket of unit trust funds that are managed by ING Funds.

Ong said ING Funds would launch another four new funds in the third and fourth quarters this year.

“That should boost our assets under management for the portfolios under the AMP Plus to at least RM500 million from RM160 million currently,” he said.

This article appeared in The Edge Financial Daily, March 31, 2011.