Citi Private Bank

Browser Requirement

To best view Citi Private Bank's site and for a better overall experience, please update your browser to a newer version using the links below.

System Outage
Citi Private Bank logo

Language Notification

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。

Staying-overweight-Europe-despite-political-turmoil

Perspectives

Staying overweight Europe despite political turmoil

Jeffrey Sacks

By Jeffrey Sacks

Head - EMEA Investment Strategy

October 4, 2017Posted InForeign Exchange, Equities, Investment Strategy and Investments

Political risk has subsided so far this year, but resurfaced in September with Angela Merkel’s much narrower than expected German election victory and in Spain after the unofficial Catalonia independence referendum. Focus will soon shift towards Italy’s general election early next year.

Despite this, we believe economic and corporate growth, along with the strong Euro and investors having too little European exposure, more than offsets the rise in political uncertainty and our Eurozone equity overweight remains intact.

The markets are far from euphoric yet. But the renewed uptick in political uncertainty does not justify a higher political risk premium at this stage. If anything, there is a stronger potential for further equity multiple expansion and improving sentiment driven by accelerating merger and acquisition activity.

The strong Euro versus the US dollar so far this year, has prompted index consolidation however is not expected to end the European equity bull market for several reasons:

Firstly, for overseas investors looking for diversification, US dollar denominated returns could be further enhanced. This could become more important during the fourth quarter as investors chase performance for the calendar year. Global institutional inflows into European equities are in their early stages. Ownership levels currently remain modest and we expect this to pick-up.

Secondly, the Euro’s strength is partly a reflection of the absence of fears of an imminent Eurozone break-up resulting from populist pressures, and also partly of anticipation of the ECB’s measures starting to boost the real economy.

Thirdly, even as the translated profits of many exporters suffer with the stronger currency, this is more than offset in many cases by notable operating and balance sheet improvements made in recent years. In addition, many European blue-chips have brands with pricing power.

Fourthly, while exporters suffer, there are strong signs of domestic resilience in most European countries, and this is reflected in strong confidence indicators across all sectors.

Fifthly, European equities have significant dividend yield support. The average dividend yield in European equities of 3% is over three times the average corporate bond yield in the region, which is the largest discrepancy of recent times.

Finally, there is great scope for alpha-generation through careful selectivity in European equities. The best areas for differentiated performance are at the theme and sector levels. We still prefer the high dividend yield and de-equitisation themes. We continue to maintain our cyclical bias over defensive sectors, with our preferred sectors being energy, financials, industrials and technology.