Investment Strategies

One Large US Bank Isn't As Bullish As Its Peers Over 2013 Economic Outlook

Chrissy Coleman, Asia Correspondent, 24 January 2013

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This past month has seen many industry players present a positive outlook for 2013 but Citi Private Bank is not as sanguine as some of its rivals, the banking group says.

The bank’s chief investment officer for Asia, John Woods, told a media briefing yesterday that he predicts this coming year will pan out very similarly to 2012 in terms of “low growth, policy risk and opportunity through occasional bouts of volatility.”

Under the heading of “Transforming Uncertainty into Opportunity,” Woods presented three themes, based on which the bank is forming its investment strategies.

Sustainable yield

Firstly, on the theme of “identifying sustainable yield,” Woods said that while current markets are priced closed to perfection, the question investors need to ask themselves is whether the fundamentals match this positive view.

The key macro drivers of the global economy remain weak and there are few catalysts for growth, the bank said. Woods named some macro risks as: the US and its lack of employment growth; the continuing eurozone recession, which he believes is likely to worsen in the first half of this year, and zero growth levels in Japan. He added that while he is hopeful that the Japanese government will soon implement growth-positive measures, “it’s hard to get too excited about the growth profile in that part of the world."

Additionally, policy risks are still high according to Woods. He cited examples of uncertainty around debt ceiling discussions in the US, upcoming elections in Europe, the new government in Japan and structural changes in China.

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