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Citi Outlook Event 2017 Questions and Answers

Q: Given the currency fluctuations amid Brexit talks, when is the best time to transfer USD to Sterling?

A: Citi analysts think that GBP is likely to weaken further over next 12 months. As FX markets can be volatile, exact timing for conversion depends on the individual circumstances. We have a specialist FX team, that your Relationship Manager can introduce you to, along with products such as FX Order Watch, enabling you to target a specific exchange rate.

Q: What would it take for GBPUSD to get back to 1.50 levels, or is 1.20 the new normal that we should get used to?

A: Citi Analysts view further downside for Sterling, based on the political risk from Brexit and the growing divergence in interest rate differentials. The historical "average" for GBP is considerably higher than the current GBPUSD exchange rate. In the medium term (12 months) Citi forecasts GBPUSD to trade at 1.08. This expectation is based on our Analyst’s base case of a “hard Brexit”, the fiscal easing from the Trump administration and further tightening of monetary policy from the Federal Reserve (Citi Analysts expect two hikes in 2017).

Q: If I have recently acquired a large portion of GBP, is it worth waiting for a market correction before investing?

A: It is difficult to time the market. Please discuss with your Relationship Manager to make the right strategy for your investments.

Q: What/Who will be black swan(s) of 2017 like Trump and Brexit were last year?

A: There are number of European elections in 2017. The French election is especially important and being watched keenly by investors for any kind of surprise. Italy could also go to polls in 2017 and will be very important for the Eurozone outlook.

Q: Is Brexit the end of the Euro?

A: Following the EU Referendum outcome, Citi Analysts highlighted the increased risk of fragmentation from Brexit taking place, and the future of the Euro is highly dependent on the political will of the core European countries.

Q: Have you priced the impact of Frexit on Brexit?

A: Forecasts by Citi Analysts encompass the likely scenario of a hard Brexit, and the impact that this would have of the UK / Europe, however their current view doesn’t include the impact from the political risk of "Frexit" (French Exit).

Q: If passporting rights are lost, is the UK headed for recession?

A: There are a number of uncertainties surrounding the Brexit negotiations. The financial sector is an important contributor to economic growth in the UK, however it is difficult to predict if passporting would be replaced with a different access and if a recession would be an outcome of this.

Q: How do you rate the risk of aggressive Russian activity (Ukraine, Baltics, etc.) to influence markets in Europe?

A: Given the relatively small size of these economies, any kind of impact is likely to be limited, however the political impact ramifications could impact European politics.

Q: How much upside is still left in the US equity market?

A: Citi Analysts believe that if the Trump administration manages to implement most of the election promises, earnings could grow meaningfully in the US and will support US markets going forward. That being said, it also poses risks in case Trump's policy measures take time to implement. Furthermore, any kind of trade war originating from new trade policies could be negative for companies.

Q: How sustainable are the debt levels in China, and what are the implications for the role of China in world economic growth?

A: China's economic growth is likely to slow down over the next few years but given the size of the Chinese economy, it will remain very important to global growth. Citi Analysts highlight that the implications of high debt levels largely depend on the extent of reforms by the Chinese government over the next few years.

Q: The panel discussed exposure to alternatives. Will you make hedge funds available to Citigold clients?

A: In 2016 Citigold Wealth Management launched two alternative Mutual Funds and our aim is to increase the number of alternatives available in the coming months.

Q: Crypto-currency has been showing a healthy investment alternative since it's been created, will Citi provide a platform for direct investment into the sector?

A: At current there are no plans to offer direct investment, however Citigold Wealth Management offers certain products on a non-advised basis (Exchange Traded Funds (ETFs)) which could allow you to gain exposure. For further details please contact your Relationship Manager.

Q: How fast will the US shale oil industry recover in your opinion? Is there any sense to invest on that market?

A: Citi Analysts expect shale oil output to recover this year and to reach previous levels by mid 2018. Citi Analysts favour the energy sector at the moment due to ongoing recovery in oil markets. For specific investments, please speak to your Relationship Manager.

Q: What are the major events to watch out for in 2017?

A: There are number of European elections (Holland, France, Germany) in 2017. French election is especially important and being watched keenly by investors for any kind of surprise.

Q: Wisdom says to buy low, sell high. Now the market is very high. I have cash to invest in equities. What should I do?

A: It is difficult to predict lows and highs in the market. Please consult your Relationship Manager and Portfolio Counsellor to align your investment strategy with your goals.

Q: When do we need to sell dollars?

A: Citi Analysts expect USD to appreciate further on the back of strong US growth, rising rates in the US and policy changes by the new Trump administration.

Q: Is using leverage good for bonds nowadays?

A: Rising interest rates can pose a challenge for these trades. Please discuss with your Relationship Manager and Portfolio Counsellor for your specific case.

Q: What is your expectations for the European debt market.

A: Citi Analysts expect ECB to continue its asset purchase program at the current pace till end of this year and this is likely to keep the European debt market stable this year.

Important information

“Citi analysts” refers to investment professionals within Citi Investment Publication and Analysis and Citi Global Markets (CGM) and voting members of the Global Investment Committee of Global Wealth Management. Citibank N.A. and its affiliates / subsidiaries provide no independent research or analysis in the substance or preparation of the information on this page. The information on this page is for general informational purposes only and is not intended as a recommendation or an offer or solicitation for the purchase or sale of any security, currency, investment, service or to attract any funds or deposits. Information on this page has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Therefore, investment products mentioned may not be suitable for all investors. Any person considering an investment should seek independent advice on the suitability or otherwise of a particular investment. Before making any investment, each investor must obtain the investment offering materials, which include a description of the risks, fees and expenses and the performance history, if any, which may be considered in connection with making an investment decision. Each investor should carefully consider the risks associated with the investment and make a determination based upon the investor’s own particular circumstances, that the investment is consistent with the investor’s investment objectives. In any event, past performance is no guarantee of future results, and future results may not meet our expectations due to a variety of economic, market and other factors. Further, any projections of potential risk or return are illustrative and should not be taken as limitations of the maximum possible loss or gain. Investments are not deposits or other obligations of, guaranteed or insured by Citibank N.A., Citigroup Inc., or any of their affiliates or subsidiaries, or by any local government or insurance agency, and are subject to investment risk, including the possible loss of the principal amount invested. Investors investing in funds denominated in non-local currency should be aware of the risk of exchange rate fluctuations that may cause a loss of principal. Citi does not provide tax advice and investors should seek advice from a tax adviser.

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