Bangkok--18 Aug--PR & Associates
Citi strategists expect the second half of 2011 to be very much like the first half of the year with continued recovery for the global economy, buffeted by headwinds from fiscal issues, currency volatility, political uncertainty and potential inflationary pressures. They suggest that investment returns need to be balanced with risk management and investors would do well to maintain a balanced and disciplined approach to their portfolios.
Mr. Haren Shah, Director and Senior Investment Strategist, Wealth Management, Citi Asia Pacific points out that: “As the year began, we felt that this was going to be a year of slower global economic recovery, punctuated with periods of uncertainty and volatility. But none of us foresaw the sudden outbreak of political uncertainty and regime change in the Middle East and North America (MENA), and devastating earthquake and subsequent tsunami in Japan. The impact of these two events is still rippling through the global economy and it would not be surprising if they continued to resonate into the second half of this year.”
Sharing his global wealth management experience and economic insights with Citigold customers and an influential audience in Bangkok, Mr. Shah elaborated that “Therefore, we articulate our thought for the second half of 2011, many of the concerns and issues that were evident in 2010 remain relevant. Sovereign debt concerns in Europe, and now even in the US, are expected to dominate. Inflation concerns which have been mounting in Asia and Latin America have begun rearing their head in developed economies. There has been significant tightening in monetary policy in emerging economies, along with the tepid start of a tightening bias among their counterparts in the developed world. Political risk is mounting as rising food prices spark more unrest in many countries, and as governments try to balance their budget deficits.”
Mr. Pavin Rodloytuk, Retail Banking Director, Citibank, N.A. added that Citigold offers Thai investors a best-in-class research and a team of global experts that advises customers both local and international investment opportunities. Citigold focuses on providing clients with personalized and comprehensive financial planning solutions and wealth management products to help them preserve and potentially grow their wealth, as part of a comprehensive suite of banking services. Customers will receive a free financial health-check to help build tailored investment portfolios, and will have access to a diverse range of global investment and deposit products, and 24/7 internet banking and Citigold Hotline. In addition, customers will have access to Citibank's unrivalled global banking network and customized privileges that are designed with customer in mind.
Citi Strategists also encourage investors to be nimble and adjust their asset allocations on a regular basis to adapt to fast-changing market conditions. They remain positive on emerging market consumerism and hedge funds. Though there were some concerns on emerging market economies, relatively better growth prospects are likely to see a return of investor fund inflows. Fears of a sharp economic slowdown as a result of tighter monetary policy in emerging markets also seem overdone and valuations look attractive, Hedge funds, especially long/short, macro and event-driven strategies, could continue to thrive as financial markets are expected to remain volatile.
Tactically China’s attempts to cool inflation and rein in property prices may be bearing fruit. Chinese economic growth is still within the 8-9 percent range and this may be best played through Hong Kong’s equity market. Commodity-based markets such as Brazil and Russia also remain Citi’s top picks for a play on the commodities theme — but expect volatility.
Though Japan remains an unknown given the uncertainty surrounding its impact on the global supply chain and length of time the country needs to get back on track. Japanese equities, after the disaster, look even more attractive from a valuation perspective, though investors may need to employ a more selective approach, with emphasis on sectors that could benefit from the reconstruction efforts. At the global level Citi likes the base metals/materials sector given its potential to leverage on Japan’s reconstruction and the continued expansion in the global economy.
Mr. Shah concluded that the second half of 2011 sees no significant difference from its first half with continued recovery for the global economy, though facing challenges from fiscal issues, currency volatility, political uncertainty and potential inflationary pressures. Overall, we remain optimistic about the prospects for global economic growth but some caution is warranted given the volatile nature of the issues that we face for the rest of this year”.
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