Emerging market equities are in for a rough ride and could see heavy losses. According to analysts at Citigroup, EM stocks are expected to lag behind their global counterparts following Donald Trump’s recent victory in the US presidential election.
The firm believes that the trade policies of the newly elected president will slow global growth, while a stronger US dollar will exert additional pressure on emerging market assets.
Saudi Arabia and India are the least exposed to trade risks, according to Citigroup analysts. At the same time, they downgraded their forecast for India to "neutral" from "overweight," citing slower earnings growth and pressure from foreign investors selling assets following recent support measures for China.
Currency strategists at Citigroup predicted that India’s Nifty 50 index could reach 25,000 by September 2025, marking a 6% increase from current levels. Regarding South Korea, the bank’s experts lowered the rating of its equities to "underweight" due to declining corporate earnings in the country.
The brokerage firm also warned that increased uncertainty over trade policy could have a negative impact on South Korea’s economy and hurt its exports to the US.
At the same time, Citigroup analysts estimate that South Korea's KOSPI index could reach 2,800 points by mid-2025, driven by a recovery in semiconductor revenues and interest rate cuts by the South Korean central bank.
Citigroup’s currency analysts view emerging market equities as "neutral" and expect the MSCI Emerging Market index to reach 1,210 points by mid-2025, representing a 10% gain from current levels.
