Alert iconWarning: Unsupported web browser

In View no longer supports your current web browser version, which means some functionality may be limited. Please update your browser for the best experience before you log in.

close icon
Citi Private Bank logo

Unsupported browser

Our website no longer supports your current web browser version, which means you are no longer able to access this website. Please update your browser to continue.

Continue
Investment strategy
October 27, 2021
2 mins

Difficult winter ahead but market recovery expected in 2022

October 27, 2021
2 mins
Jeffrey Sacks
Head of EMEA Investment Strategy
Maya Issa
Global Investment Strategy
SUMMARY

European markets are likely to face a difficult winter on rising costs of living, company labour and material shortages, and exposure to the slowing Chinese recovery. However, Citi Private Bank believes a recovery is on the horizon.


  • We’ve reduced European ex-UK equities to neutral and UK equities overweighting has been slightly reduced. However, on a 12-to-18-month horizon, the markets should be supported by ongoing earnings growth, above-average dividend yields, and undemanding valuation multiples.
  • The region has high exposure to quality companies with strong balance sheets, value in sectors like financials, defensive exposure in sectors like healthcare, and rising alternative energy investment opportunities.
  • Underweight fixed income. Sovereign bonds remain expensive, even after the recent backup in yields. The coming months will see further price pressures, driven by rising inflation and rising tapering expectations. We see selective opportunities in EU green bonds and in corporate high yield bonds.
  • Sterling and the euro are unlikely to sustain rallies. Positioning in both currencies is not over-extended and next year could benefit from the resumption of inflows into the region. However, in the short-term the current support levels are vulnerable.
  • The UK budget on Wednesday (October 27) aimed to re-establish sound public finances even while supporting the growth upturn and jobs recovery.
  • The German coalition-building process is expected to lead to a coalition led by the SDP, with a smooth transition and policies that are not likely to be radical changes.

Insights

See our insights and the issues that matter for your wealth.

View all insights

Insights

See our insights and the issues that matter for your wealth.

View all insights
Close Modal

You're about to leave the Citi Private Bank website

By clicking continue, you will visit a third-party website that is not owned or managed by us.

We have no control of the content, privacy or security beyond this point.

Continue

Stay on this page