- Given a strong 1Q19 rally, seasonally weaker summer months and re-emergence of trade tensions, Citi analysts believe a period of de-risking within equities should be expected.
- As a result, Citi analysts have tactically reduced their global equity allocation to underweight. Within equities, Citi still prefers Emerging Markets (EM), particularly Asia, in the long term.
- Cyclical stocks have rebounded in 1Q19 as recession fears have subsided. However, economies are growing at a slower pace and trade risks appear elevated. Amongst the defensives, Citi analysts are overweight the more growth-oriented Health Care and Communication Services sectors.