Citi's equity markets positioning model notes conviction concentrates in KOSPI and FTSE
- Citi writes that as geopolitical and macro uncertainty remains elevated, the combination of extended longs on FTSE and KOSPI, weakness in the US and China, builds a case for a continued selective risk approach
- The bank notes that global equity positioning continues to turn increasingly polarised, with select European and Asia indices emerging as clear favorites.
- "The US shows a growing bearish undercurrent despite the seemingly resilient headline flows," and "S&P 500 flows were positive but normalised positioning have hardly changed, while Nasdaq positioning trended lower."
- In Europe, Citi says that the FTSE holds max long, with elevated profit levels.
- In Asia, the KOSPI continues to be supported by new long risk flows, a trend also seen in Nikkei positioning. China A50 and Hang Seng positioning remains weak.
Context
Citi's recent analysis highlights a stark divergence in equity market positioning, indicating strong bullish sentiment in the FTSE and KOSPI amidst broader bearish trends in US equities. This suggests that traders might want to selectively favor these indexes while being cautious with US exposure, as the underlying macro and geopolitical uncertainties could impact performance across regions. Overall, it reflects a polarized landscape where specific markets are capturing investor interest despite general volatility.
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