stocks has come despite worsening fundamentals, while India is delivering solid profits, Citigroup Inc. strategists wrote, downgrading China and upgrading India in emerging market allocation.
“China’s recent rally has occurred despite weakening fundamentals; we downgrade to neutral,” strategists including David Groman and Beata Manthey wrote in a note dated May 10. It upgraded India to overweight on strong earnings momentum and projected growth.
In the context of rising global valuations, the additional gains in emerging markets should come from earnings growth, which is present in countries such as India, the analysts said.
Among other key changes, Citigroup upgraded South Africa to overweight and Southeast Asia to neutral. It reduced Poland to neutral and Saudi Arabia to underweight.