Emerging markets unlikely to match 2012 gains: Citigroup

MUMBAI Thu Jan 10, 2013 2:31pm IST

A broker looks at a computer screen while trading at a stock brokerage firm in Mumbai November 11, 2008. REUTERS/Arko Datta/Files

A broker looks at a computer screen while trading at a stock brokerage firm in Mumbai November 11, 2008.

Credit: Reuters/Arko Datta/Files

Related Topics

MUMBAI (Reuters) - Citigroup cut its regional stock ratings for Asia and for Central Eastern Europe, Middle East and Africa (CEEMEA), but raised Latin America to "overweight", adding that emerging market equities are unlikely to match their 2012 performance this year due to less attractive valuations.

Citigroup said it remains moderately bullish on emerging market equities, however, expecting a full-year gain of 9 percent in dollar terms and projecting total returns of around 12 percent for the MSCI Global Emerging Market index. The index rose 15 percent last year.

The investment bank said the shares' performance would weaken due to less attractive valuations compared with a year ago, despite supporting factors such as continued liquidity from quantitative easing in developed economies.

"(Emerging market) equities re-rated last year. We doubt that will happen again in 2013," Citigroup said in the report dated on Wednesday.

Citigroup cut Asia to "neutral" from "overweight", citing less upside potential this year despite strong fundamentals, while lowering CEEMEA to "underweight" from "neutral" due to weak growth, macroeconomic risks and soft oil prices.

However, the investment bank raised Latin America to "overweight" from "underweight" because of its severe underperformance last year.

Across countries, Citigroup raised Brazil to "overweight" from "underweight" while boosting Mexico to "overweight" from "neutral", and raised Taiwan to "neutral" from "underweight".

Citigroup also cut Thailand, Czech Republic and Peru to "neutral" from "overweight", while cutting South Africa and India to "underweight" from "neutral".

By sectors, Citigroup raised emerging market industrials to "neutral" from "underweight" while cutting telecoms to "underweight".

(Reporting by Rafael Nam and Abhishek Vishnoi; Editing by Edmund Klamann)

FILED UNDER:

Monetary Policy Committee

Reuters Showcase

Microfinance

Microfinance

Funding the unfunded: India helps small business borrow to grow  Full Article 

Insurance Sector

Insurance Sector

UK healthcare firm Bupa sees strong growth in India  Full Article 

Sensex Rises

Sensex Rises

Sensex edges up; consumer and healthcare stocks rise  Full Article 

Market Eye

Market Eye

FTSE adds nine Indian firms as large-caps in Asia-Pacific ex-Japan index   Full Article 

Indian Ocean Diplomacy

Indian Ocean Diplomacy

PM Modi to ramp up help for Indian Ocean nations to counter China influence  Full Article 

ECB Bond-Buying

ECB Bond-Buying

ECB raises growth forecasts, to start printing money next week  Full Article 

China Economy

China Economy

China signals "new normal" with lower annual growth target  Full Article 

Pharma Sector

Pharma Sector

Panel recommends waiving late-stage trials for some drugs  Full Article 

E-commerce

E-commerce

China backs e-commerce expansion in win for Alibaba, JD.com  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage