Investing.com-- Citi analysts said they were cautiously positive on Asian equities, with an improving outlook for economic growth offset by the prospect of trade and policy risks from U.S. President Donald Trump.
Citi said it was targeting a 10% upside in regional equities by end-2025.
The investment bank said it saw “competing forces” on the macroeconomic front- with resilient global economic growth and lower interest rates likely to support earnings. But “Trump-related risks,” which include trade tariffs, higher yields and strength in the dollar- will remain a headwind for Asia.
Uncertainty over Trump also clouds the outlook for China, Asia’s biggest economy, given that he has promised steep trade tariffs against the country.
But Citi analysts said they were Neutral on China, citing the potential for Beijing to dole out even more stimulus and support for local markets.
“China will likely bear the biggest brunt of tariffs, and the path to reaching a détente
on US-China tariff escalation looks more difficult… Monetary and fiscal policies will stay supportive, but Beijing’s policy stance will likely be more reactive than proactive,” Citi analysts said in a note.
As for allocations in other countries, Citi said it favored regions with solid fundamentals, a greater resilience to Trump risks, and some positive exposure to China.
Citi said it was Overweight on Taiwan, India, and the Philippines. Citi is Neutral on China/Hong Kong, Indonesia, and Singapore, and is Underweight on South Korea, Malaysia, and Thailand.
The investment bank also said it was Neutral on emerging markets at a global scale.