# Citi expects global equities to rally 18% by end-2023
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-10-06
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Citi Predicts 18% Global Equity Rise by 2023
Meta Description: Beaten down valuations may attract investors, but warn of economic risks. Citi sets target for MSCI AC World Index at 780 points by 2023.
URL: https://financedigest.com/citi-expects-global-equities-to-rally-18-by-end-2023html

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(Reuters) – Citigroup is expecting global equities to rise about 18% from now through the end of 2023, saying beaten down valuations from a relentless selloff this year may attract investors, although it warned of “considerable risks” of an economic slowdown.

Global stock are trading well below their peaks, with the U.S. benchmark S&P 500 index in a bear market for most of this year as central [banks’ war on inflation has led to a steep rise](https://www.financedigest.com/sterling-rises-as-receding-bank-sector-worries-lift-sentiment.html "Sterling rises as receding bank sector worries lift sentiment") in interest rates and sparked fears of an economic downturn.

Strategists from the [Wall Street](https://www.financedigest.com/weary-wall-street-cheers-improved-consumer-confidence.html "Weary Wall Street cheers improved consumer confidence") bank on Thursday set a target of 780 points for the MSCI AC World Index (Local), which includes emerging markets, for end-2023, compared with 679 points it hit on Sept. 30.

Highly valued stocks have been hit hard, with the MSCI AC [World Growth index derating from 31x to 19x,” Citi’s](https://www.financedigest.com/uks-most-liveable-city-manchester-sets-its-sights-on-the-world-from-tourists-to-property-investors.html "UK’s most liveable city, Manchester sets its sights on the world, from tourists to property investors") Robert Buckland said, referring to price-to-earnings(PE) ratios. “We think much of this derating is now done.”

That has made valuations look more attractive for now, Buckland said, with U.S. [equities the most expensive and the UK and emerging markets](https://www.financedigest.com/deutsche-bank-equity-bear-market-rally-will-stretch-into-2023-dollar-weaker.html "Deutsche Bank: Equity bear market rally will stretch into 2023, dollar weaker") (EM) the cheapest.

Citi maintained an “overweight” rating on U.S. equities, saying a strong [dollar would continue to boost the relative performance of those stocks](https://www.financedigest.com/stocks-and-gold-cheer-u-s-inflation-picture-while-dollar-slides.html "Stocks and gold cheer U.S. inflation picture, while dollar slides").

It also backed its “neutral” rating for EM [stocks](https://www.financedigest.com/uk-stocks-slip-as-rate-hike-worries-grip-investors.html "UK stocks slip as rate hike worries grip investors") and “overweight” rating on UK equities.

The UK economy is in trouble, but 70% overseas exposure and cheap valuations should limit the damage for the [stock market,”](https://www.financedigest.com/the-secret-to-stock-market-success.html "The Secret to Stock Market Success") the brokerage said.

Many blue-chip London-listed [companies earn a sizable portion of their revenue](https://www.financedigest.com/infrared-thermometer-market-2021-global-leading-companies-analysis-revenue-trends-and-forecasts-2026.html "Infrared Thermometer Market 2021 Global Leading Companies Analysis, Revenue, Trends and Forecasts 2026") overseas, while the benchmark FTSE 100 index includes a number of heavyweight commodity-related companies.

Citi also [raised its rating](https://www.financedigest.com/bank-of-england-raises-rates-to-3-5-says-inflation-has-peaked.html "Bank of England raises rates to 3.5%, says inflation has peaked") on the global information technology sector to “overweight”, citing more reasonable valuations and worsening earnings prospects elsewhere.

It said analysts’ consensus estimate of a 6% rise in [global earnings per share in 2023 “may prove too optimistic” and forecast earnings to decline 5% next year](https://www.financedigest.com/2021-the-year-of-the-global-workforce-for-british-small-businesses.html "2021: The Year of the Global Workforce for British small businesses ").

(Reporting by Siddarth S and Pushkala Aripaka in Bengaluru; Editing by Savio D’Souza and Anil D’Silva)


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