Citi Wealth Insights

Focus may likely shift to US Q2 earnings season which unofficially begins with many of the big banks reporting on Tuesday, July 14.

As major parts of the US economy reopened, a re-acceleration of COVID-19 cases began with some states recording daily highs. However, Citi analysts think it is unlikely to see a repeat of indiscriminate shutdowns across the world economy as a response to the threat.

With supportive fiscal and monetary policies in place, Citi analysts are overweight global equities going into the second half. By region, US small and mid-caps, emerging Asia and Latin America are preferred. By sectors, long-term themes such as Health Care and Digitization are favored, while also adding to Real Estate Investment Trusts (REITs).

Europe and UK face challenging unlocking phases. Citi analysts expect some resurgences from COVID-19, but no new widespread and prolonged lockdowns.

In the months ahead, occasional bouts of uncertainty and market volatility can be expected, with a potential re-emergence of COVID-19 cases, US-China relations and US elections among the top risks.

Population aging is often presented as a crisis for China. Instead, Citi analysts see immense opportunities amid the challenges.