Citigroup Downgrades U.S. Stocks and Upgrades Chinese Stocks as “American Exceptionalism” Slows

Citigroup has downgraded U.S. stocks to neutral and upgraded Chinese stocks to overweight,
citing a decline in what is known as “American exceptionalism.”
The bank expects U.S. economic growth momentum to slow compared to the rest of the world in the coming months.

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Citigroup

Citigroup

Strategists at Citi Bank stated in a research note that this decision aligns with their view
that the superiority of the U.S. economy has paused temporarily, prompting them to reassess global asset allocations.
They noted that they had already downgraded U.S. stocks to neutral in their last report,
a decision they believe remains justified given the current market conditions.

This downward revision comes after Citi Bank had maintained an overweight rating on U.S. stocks since October 2023.
However, warning signals from the bank’s models led them to implement the changes on Friday and Monday.

Analysts explained that while U.S. stocks may regain their outperformance when the artificial intelligence narrative resurfaces,
in the near term, U.S. growth momentum is expected to lag behind that of Western Europe.

In the credit sector

Citi Bank reduced its weighting in U.S. high-yield bonds while increasing its rating for investment-grade bonds in the European Union,
reflecting a shift in its outlook on global financial markets.

Regarding the Chinese market, analysts explained that the decision to upgrade Chinese stocks was made despite the recent market rally.
They believe the market has undergone sufficient corrections and has become more attractive for investment.

Despite the ongoing risks related to tariffs, the bank maintained a neutral stance on Japanese stocks,
stating that this position could offer some protection amid geopolitical developments.

It also noted that a potential trade agreement with China could be highly positive,
but the recent adjustments keep its overall stock market stance neutral for the time being.

Citigroup Downgrades U.S. Stocks and Upgrades Chinese Stocks

Citigroup Downgrades U.S. Stocks and Upgrades Chinese Stocks

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