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Please be advised that future verbal and written communications from the bank may be in English only. These communications may include, but are not limited to, account agreements, statements and disclosures, changes in terms or fees; or any servicing of your account.

Por favor, tenga en cuenta que es posible que las comunicaciones futuras del banco, ya sean verbales o escritas, sean únicamente en inglés. Estas comunicaciones podrían incluir, entre otras, contratos de cuentas, estados de cuenta y divulgaciones, así como cambios en términos o cargos o cualquier tipo de servicio para su cuenta.

Informamos que as futuras comunicações do banco, verbais e escritas, podem estar disponíveis apenas em inglês. Essas comunicações podem incluir, entre outras, acordos de conta, extratos de conta e divulgações, alterações aos termos ou tarifas, ou qualquer tipo de serviço pertinente à sua conta.

仅此通知,本行即日起发出的口头及书面通信可能将只提供英文版本。这些通信可能包括但不限于账户协议,账单和通知,条款或费用变更;或任何为您账户提供的服务。

Please be advised that future verbal and written communications from the bank may be in English only. These communications may include, but are not limited to, account agreements, statements and disclosures, changes in terms or fees; or any servicing of your account.

Por favor, tenga en cuenta que es posible que las comunicaciones futuras del banco, ya sean verbales o escritas, sean únicamente en inglés. Estas comunicaciones podrían incluir, entre otras, contratos de cuentas, estados de cuenta y divulgaciones, así como cambios en términos o cargos o cualquier tipo de servicio para su cuenta.

Informamos que as futuras comunicações do banco, verbais e escritas, podem estar disponíveis apenas em inglês. Essas comunicações podem incluir, entre outras, acordos de conta, extratos de conta e divulgações, alterações aos termos ou tarifas, ou qualquer tipo de serviço pertinente à sua conta.

仅此通知,本行即日起发出的口头及书面通信可能将只提供英文版本。这些通信可能包括但不限于账户协议,账单和通知,条款或费用变更;或任何为您账户提供的服务。

Emerging-markets-growth-will-drive-equities’-returns

Emerging markets growth will drive equities’ returns

Steven Wieting

By Steven Wieting

Chief Investment Strategist and Chief Economist

October 24, 2017Posted InInvestments, Equities and Investment Strategy

The Citi Private Bank Global Investment Committee left its asset allocation unchanged at its meeting on 19 October 2017. Global Equities remain 2.0% overweight. Global Fixed Income remains 3.0% underweight, with cash and gold small overweight positions.

Our overweight position in equities remains entirely concentrated in emerging markets (EM) and select developed markets (DM) such as the Eurozone. North Asia likely offers the strongest equity return opportunities regionally within EM.

We remain neutral (fully allocated) to US equities. This reflects rising corporate profits and our expectation of profit gains in both the US and international markets in 2018. It also reflects the near record valuation discount of non-US markets to the US.

Early in the present recovery, markets appeared to fear “global contagion” on any local risk. Today, most negatives fail to derail even assets in close proximity. As such, the ability to positively surprise financial markets will be more difficult in the coming year amid higher growth expectations. This suggests solid, but less dramatic asset market gains than seen in the past year.

Our asset allocation anticipates a “catch-up” performance for non-US equities over the next several years. In the nearer-term, US-centered assets may outperform as markets have raised expectations for US tax cuts and Federal Reserve rate hikes. This has predictably meant a partial rebound in the USD and a stronger performance for domestic-focused US equities. It has also meant that performance has tilted somewhat toward more highly-valued assets (when looked at regionally.)

Global markets face a near-term challenge as President Trump is expected to select a new Fed Chair this month. With stark choices between continuity and dramatic change on the table, foreign exchange markets may be posed to exaggerate the practical impact of the choice.

Two candidates reportedly in the running for Fed Chair would appear to support a break from recent Fed policy. Their appointment would likely accelerate the expected rate hike path and cause a brief spike in market volatility. Two others would suggest continuity with the current benign and predictable US monetary policy outlook.

Despite the risk of a short run over-reaction of markets to a changing of the guard at the Fed, in fixed income, EM and US credit remain far more competitively valued globally than European and Japanese bonds. We continue to overweight both US investment grade and US high yield debt within a global fixed income allocation that is underweight overall.

Investors may see greater benefits from hedges and alpha-seeking strategies after large gains in broad equity indices and a decline to historic lows in implied volatility. With many local risks - such as Brexit implementation in the UK, NAFTA negotiations, and looming elections in 2018 in some Latin American countries - we believe well diversified global portfolios will better serve investors than regionally concentrated portfolios.