Analysts at Citibank, point out they have reduced their global equity allocation to underweight, and considering equities, they prefers Emerging Markets, particularly Asia.
Key Quotes:
“Navigating global markets in the second half of 2019 requires focus upon new geopolitical risks and economic opportunities, while also moving portfolios toward safer ground. Citi analysts believe that markets have yet to fully price in all of the possible outcomes from trade tensions and as a result, a period of de-risking within equities should be expected.”
“Citi analysts have tactically reduced their global equity allocation to underweight. Within equities, Citi still prefers Emerging Markets (EM), particularly Asia, in the long term.”
“At the G20 Summit, President Trump said the US would hold off on raising incremental new tariffs, while US and Chinese representatives resume work on trade negotiations. Whatever happens, policymakers in China are much more ready to support the economy if negotiations go awry compared with 12 months ago.
“In Asia, growth outside China is also proving resilient, with growing domestic demand and intra-regional trade decreasing Asia’s reliance on the US. Gains in the share of trade for countries in Asia may limit the regional spillover from the US-China conflict. For longer-term investors, Asian markets are likely to continue to outperform, especially in China, Citi’s favored region.”
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