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Citi

An Improving Base Case

Key Takeaways

  • Positive vaccine trial results have boosted Citi analysts’ expectations of a likely end to the global pandemic in the second half of 2021. The massive performance dispersion between many “COVID-19 cyclicals” and “COVID-19 defensives” in 2020 leaves room for substantial performance rotation in 2021.
  • Overweight global equities: Europe, Japan, emerging Asia and Latin America are preferred. Within the US, Citi analysts are neutral on large caps and prefer small and mid-caps. Global small and mid-cap equities (SMID) and Real Estate Investment Trusts (REITs) are also favored.
  • For the coming year, “COVID-19 cyclicals” such as financials and industrials appear attractive as the eventual departure from COVID-19 could see a potential recovery and rotation trade and as central banks continue to still maintain their accommodative stance.
  • Over the longer-term, Citi analysts are in favor of “unstoppable trends” such as The Rise of Asia, Increasing longevity and Digital Disruption. A new addition to the unstoppable trends is New Energy, with Citi analysts expecting renewed urgency on climate change and environmental standards.

 

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