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:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Canada Shooting

Canada Shooting

Attack on parliament, killing of soldier stun Canada's capital.  Full Article 

Earnings Season

Earnings Season

Wipro sees rosier end to year as U.S. clients spend.  Full Article 

Business Climate

Business Climate

Fears for tough penalties grow as India cleans up business  Full Article 

New Email Service

New Email Service

Google launches new email service dubbed "Inbox".  Full Article 

DLF Appeals

DLF Appeals

DLF seeks interim relief from capital market ban  Full Article 

Falling Oil Prices

Falling Oil Prices

Indian consumers respond to softer oil, food prices  Full Article 

Book Keeping

Book Keeping

RBI fires warning shots on companies' lack of FX hedging.  Full Article 

Policy Repo Rate

Policy Repo Rate

Most external members suggested rate cut in RBI's Sept review.  Full Article 

Reuters India Mobile

Reuters India Mobile

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