Citi Global Wealth Investments Releases Outlook 2022: The Expansion Will Endure: Seeking Sustained Returns

Rhea-AI Summary

Citi Global Wealth Investments has released its Outlook 2022 report, which forecasts a normalization of economic conditions following the pandemic's strong recovery phase. The report emphasizes the need for investors to adjust portfolios by focusing on 'long-term leaders' in high-quality companies, suggesting potential for 8% earnings growth in 2022. Citi warns of risks including COVID-19 mutations and geopolitical tensions, while highlighting trends in digitization and economic shifts towards Asia. The report offers insights into maintaining wealth amid negative real interest rates.

Positive

• Forecast of 8% earnings growth in 2022 after a strong 45% rise in 2021.
• Emphasis on long-term leaders in expanding industries for potential investment stability and growth.
• Identification of unstoppable trends reshaping business and portfolios, including digitization and market shifts.

Negative

• Warning about the threat of negative real interest rates affecting purchasing power.
• Potential risks from COVID-19 mutations, U.S.-China relations, and cyberattacks that could impact economic stability.

As the year of the “great rebound” draws to a close, Citi looks at how sustained economic growth in the coming year could impact portfolios

NEW YORK--(BUSINESS WIRE)-- Citi Global Wealth Investments today released its Outlook 2022 report, titled The expansion will endure: Seeking sustained returns. Released twice yearly, Outlook provides in-depth insights into the global economy and financial markets for the year ahead and beyond, also highlighting transformational, multi-year “unstoppable trends” across markets.

The latest edition suggests that the strongest phase of the economic and market recovery from the pandemic is likely behind us. More normal conditions lie ahead following the “great rebound,” with more moderate returns as the equity bull market matures. But rather than leaving portfolios as they are, Citi believes this normalization calls for investors to make important asset allocation changes.

Going into 2021, Citi recommended positioning for a snapback in many assets that had been hit hardest by the pandemic. These included emerging markets, small-cap equities and beaten-down cyclicals. For 2022 and beyond, by contrast, Citi emphasizes exposure to “long-term leaders,” equities in high-quality companies in expanding industries that may deliver earnings growth in the long run. Historical analysis shows that long-term leaders have delivered strong returns with lower volatility over time. Examples include “dividend growers,” equities in companies with long records of increasing their dividends.

With inflation up but bond yields remaining low, Citi is reiterating the threat that negative real interest rates pose to wealth. “As we warned in last year’s report, the owners of cash and many bonds have suffered a loss of purchasing power in 2021,” said David Bailin, Chief Investment Officer and Head of Citi Global Wealth Investments. “We compare the effect of negative real rates to the activities of a cash thief, who we expect to remain at large in 2022. But we see various investments that may help clients preserve and grow purchasing power in the face of this threat.”

Citi has also identified “unstoppable trends” that are reshaping business and everyday life, as well as portfolios. These include multiple aspects of digitization such as cybersecurity, 5G and related technologies and fintech, as well as the ongoing shift of economic power towards Asia. In each of these areas, the pandemic has accelerated change. New working patterns, for example, are transforming the demand for offices, while the growth of online retail is intensifying the need for warehouse and delivery facilities.

“While we reiterate the importance of keeping portfolios positively positioned and fully invested, we also acknowledge a range of risks,” said Steven Wieting, Chief Investment Strategist and Chief Economist at Citi Global Wealth Investments. “The potential for vaccine-resistant COVID mutations, deteriorating U.S.-China relations, large-scale cyberattacks and evolving consumer spending habits based on inflation expectations all require close monitoring.”

With the economic expansion set to endure, we see the potential for further upside in financial markets. After a 45% rise in 2021, global earnings per share may increase by a more normal 8% in 2022. Global equities might deliver a mid-to-high single-digit return in this environment, with global fixed income returning 0% to 1% before inflation.

The full report, a summary version, short videos and other materials can be accessed here.

Announced in January 2021, Citi Global Wealth (“CGW”) is comprised of the wealth management businesses of Citi Private Bank and Citi’s Global Consumer Bank. Through these businesses, CGW delivers Citi’s wealth solutions, products and services globally. The unified management and delivery of CGW’s wealth strategy represents a further commitment by Citi to become a leading global wealth business. Citi Global Wealth Investments (“CGWI”) is comprised of the Investments and Capital Markets capabilities of Citi Private Bank, Citi Personal Wealth Management and International Personal Bank U.S.

About Citi:
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management. Additional information may be found at www.citigroup.com | Twitter: @Citi | YouTube: www.youtube.com/citi | Blog: http://blog.citigroup.com | Facebook: www.facebook.com/citi | LinkedIn: www.linkedin.com/company/citi.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211209006046/en/

Media:

North America: Gabriel Morales +1 718 248 7029 gabriel.morales@citi.com

EMEA: Belinda Marks +44 20 7508 3082 belinda.marks@citi.com

APAC: Godwin Chellam +852 2868-7682 godwin.chellam@citi.com

LATAM: Alex Ravinet +1 305 420 4292 alexandra.ravinet@citi.com

Source: Citi Global Wealth Investments

FAQ

What is the key focus of Citi's Outlook 2022 report?

Citi's Outlook 2022 report emphasizes asset allocation changes towards 'long-term leaders' in high-quality companies for sustained returns.

What earnings growth does Citi predict for 2022?

Citi predicts an 8% earnings growth in 2022, following a strong recovery in 2021.

What risks does Citi highlight in their Outlook 2022 report?

Citi highlights risks including vaccine-resistant COVID mutations, U.S.-China relations, and the impact of inflation on consumer spending.

How does Citi suggest investors adapt their portfolios in 2022?

Citi suggests investors shift towards equities in high-quality companies and sectors exhibiting long-term growth potential.

What are the unstoppable trends identified by Citi?

Citi identifies trends in digitization, cybersecurity, 5G, and shifts in economic power towards Asia as significant influences on portfolios.