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Citi Wealth Insights

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Balancing Risks and Opportunities as the Pandemic Accelerates

During this period of uncertainty, It is crucial to maintain an investment philosophy that includes maintaining a well-balanced diversified portfolio and avoid the temptation to rapidly change allocations.
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Growth Likely to Deteriorate Before Bottoming

Citi analysts have further revised down GDP projections for 2020. Global GDP is now seen contracting by 1.6% YoY (-2.9pp). Advanced Economies are projected to contract by 3.6% YoY (-3.8pp) and Emerging Markets, while positive, have also been revised down to 1.1% YoY (-1.9pp) in 2020.
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Is Policy Enough to Bridge Over Economic Shock?

Policymakers are taking extreme and unprecedented steps to limit the disruption’s long-term effects on economic viability. If policymakers are able to compress a major economic shock into a relatively short period, high levels of financial market volatility are expected for the foreseeable future.
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Reviewing Citi’s Global Growth Estimates

Citi analysts have lowered global growth forecasts for 2020 by 1.2pp to 1.3% and raised 2021’s by 0.2pp to 3%. The base case expects a sharp deceleration of economic activity in the first half, followed by a modest rebound in the second half.
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COVID-19 Fears and Oil Market Turbulence

Global health crisis have typically seen a short-term negative impact on markets followed by a substantial rebound thereafter. However, with economic vulnerability high, the concoction of shocks from containment measures, persistent uncertainty, financial market turmoil and unprecedented oil price collapse lead Citi analysts to believe that global growth could potentially be dragged down close to 0.0% in 2020.
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Oil Shock Adds to Rising Risk

Brent crude prices fell by more than 20% from Friday’s close of US$45.27 after Saudi Arabia announced price cuts and output increase. This led to substantial losses in equities and energy credit that were already weak from COVID-19 contagion. At the time of writing, Brent at US$33 is the lowest since 2004, with the exception of a few weeks in early 2016.
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