Citi expects world stocks to hover around current levels in 2021 and cut US equities to “neutral” as lockdowns induced by fresh waves of Covid-19 infections roil global economies.
The bank upgraded emerging market and UK equities to “overweight” in a note published on Thursday, citing the unreasonable valuations and robust earnings momentum. It also expects weakening US dollar to help these markets outperform.
With global equities trading at 20 times 12-month forward earnings, the Wall Street bank sees no further upside as the valuation is well above the long-term median of 15 times forward earnings.
US valuations are at a whopping 23 times forward earnings.