Citigroup Expects Global Stock Indices to Rise 18% by the End of Next Year

[Photo by AP Yonhap News]

[Asia Economy Reporter Byunghee Park] Citigroup has forecasted that the global stock market will rise by 18% by the end of next year, according to major foreign media reports on the 6th (local time).

Citigroup analyzed that the attractiveness of undervalued stocks has increased due to large-scale sell-offs this year. However, it cited the significant risk of economic slowdown as a variable.

On this day, Citigroup presented the year-end forecast for next year of the MSCI ACWI (All Country World Index), which reflects global stock price indices, at 780. The MSCI ACWI index recorded 679 as of the end of the third quarter.

Analyst Robert Buckland stated, "As the stock market plunged, the price-to-earnings ratio (PER) of the MSCI ACWI index fell from 31 times to 19 times," adding, "I believe the PER decline has almost reached its final stage."

Analyst Buckland explained that UK and emerging market stocks are the most undervalued. The investment opinion was 'neutral' for emerging markets and 'overweight' for the UK market.

Buckland explained, "Although the UK economy has problems, blue-chip companies listed on the London Stock Exchange earn 70% of their sales overseas."

He stated that while the US stock market is the most expensive, he maintains an overweight opinion. He explained that the strong dollar could increase relative returns.

By sector, an overweight opinion was given for the Information Technology (IT) sector.

Citigroup noted that while the market expects global corporate earnings to increase by 6% next year, this is overly optimistic, and instead, it expects corporate earnings to decrease by 5%.