Citi Says Return to Certainty Spells Time to Put Cash to Work

Investors should put their cash to work as more certainty returns to the markets after a Biden victory, according to Citigroup Inc.’s private-banking arm.

The “trifecta of knowing who the next president will be, that the end of the pandemic is at hand and that sufficient economic stimulus will be available for the interim will mark the bright start of the New Economic Cycle in 2021,” Chief Investment Officer David Bailin and Steven Wieting, the bank’s chief investment strategist said in a note published Sunday.

With Joe Biden declared the next U.S. president, investors are now focusing on the size of a potential stimulus package given that a possibly split Congress would likely result in a smaller one. They are also turning their attention back from the election to the development of a Covid-19 vaccine and the pace of economic recovery, as virus cases flare up again in major cities globally.

Citi Says Return to Certainty Spells Time to Put Cash to Work

Markets will stop treating Covid as a “permanent impediment to humanity” when there’s a vaccine even before any economic benefits start to show, Citigroup said. “Thus, for investors, we see this as a time to maintain full exposures to markets,” the strategists said, adding that a solution to Covid is far more important to the economy than political changes in the U.S.

The Citi strategists said investors should consider investing in “leave home” trades in the U.S. such as financials as the economy normalizes, and opt for global stocks over bonds given the low interest rate environment.

“Stay-at-home” sectors which were boosted during the pandemic like technology will be scrutinized more by investors, they said, adding there will be differences in these stocks’ performance.

Citi prefers lagging, cyclicals-heavy Southeast Asian markets such as Singapore and Thailand because of their attractive valuations as Asian economies recover, Ken Peng, head of Asia investment strategy said in an interview last week.

©2020 Bloomberg L.P.

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