Citi Wealth Insights

After the rally in early 2019 driven by the onset of Fed dovishness and trade deal progress, investors are asking, “how much more will this rally continue?

While political noise continues to linger in the background, more recently there has been positive news in UK and Europe, which if sustained, could potentially see a significant improvement in the global risk backdrop.

M2 growth decelerated by 0.4ppt to 8%YoY in Feb, worse than expected (at 8.4%YoY)

China equities have rallied 15-30% in the first two months of 2019. However, this still leaves historical forward P/E and P/B forward valuations on both MXCN (China MSCI Index) and CSI300 near the lows seen since the GFC.

Citi analysts believe that rest of the world would be highly vulnerable to a US growth shock, but this may not fully reflect the increasingly important role China plays globally.

As markets rebounded in January and February, investor sentiment looks to be on a more sustained upward trend, supported by optimism on progress for both the US-China trade talks as well progress in Brexit negotiations.