Home » Citi is bullish on U.S. and U.K. stocks, sees global equities up 18% by the end of next year By Investing.com

Citi is bullish on U.S. and U.K. stocks, sees global equities up 18% by the end of next year By Investing.com

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Citi is bullish on U.S. and U.K. stocks, sees global equities up 18% by the end of next year By Investing.com
© Reuters. Citi is bullish on U.S. and U.K. stocks, sees global equities up 18% by the end of next year

Investing.com on Thursday (6th), Citibank strategists reiterated their “overweight” rating on U.S. stocks, believing that earnings per share are expected to remain solid. At the same time, Citi also gave UK stocks an overweight rating, but was neutral on emerging markets and European markets. Citigroup, on the other hand, believes it should underweight Japan and Australia.

Citi expects the global stock index to rebound 18% by the end of 2023. However, the agency also pointed to “considerable” risks to global equities. Overall, stocks are more attractive after the year, but investors should pick stocks carefully.

The strategists noted, “US equities (16x) still look the most expensive. The cheapest major markets are the UK (9x) and emerging markets (11x). Rising bond yields have increased the relative attractiveness of fixed income products, although The U.S. remains the only developed market where 10-year bond yields are higher than equities. Citi’s Levkovich Sentiment Index (U.S. panic/euphoria) is now in panic territory, suggesting an attractive short-term entry point.” However, Citi Oppose “chasing up”.

Like other research firms, Citi strategists also believe the expected EPS is too high. The consensus forecast for MSCI AC World‘s EPS growth is 10% this year and 6% in 2023. Citi sees a 5% EPS decline in 2023.

“The average EPS decline in the last three major global profit recessions has been 31%,” the bank’s strategists said. “The more cyclical markets (Japan, Europe) appear to have the most vulnerable EPS forecasts, although a weaker exchange rate may help Contain losses. Cyclical sectors are also affected. Traditional defensive sectors should be more resilient.”

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In terms of sectors, Citi upgraded the information technology sector to overweight and continued to be bullish on financials thanks to more attractive valuations.

Compilation: Liu Chuan

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