Citi Personal Wealth Management

January Tests New Year Resolutions

Monthly Market Snapshot: January 2020

Highlights

Strong equity market momentum took a step back in January as the spreading of the coronavirus forced investors to test their resolutions. In the United States, year-to-date gains were erased with the S&P 500 closing the month largely unchanged. Emerging markets were not so lucky with the virus shaving 4.7% off of the MSCI emerging markets index. Safe-haven assets outperformed with the U.S. broad investment grade bond index returning 2.0%.

Temporary factors continue to cloud the outlook. While investors have been expecting growth to rebound, temporary drags on GDP like the coronavirus and Boeing’s stalled aircraft production are likely to weigh on growth in the near-term. With stocks having such a strong rally in 2019, we would not be surprised to see an increase in market volatility as investors reassess.

Citi’s Private Bank’s Global Investment Committee (GIC) shifted its equity weightings by adding to its overweight in China and reducing its overweight to other Asia-Pacific markets and the U.S. With Chinese stocks selling off sharply, now may be a good time to add exposure as the impact of the coronavirus is likely to be temporary. The Committee funded this move by slightly reducing its exposure to the U.S., where prices remain elevated.