Investors should switch from European stocks to emerging markets: Citigroup

A gauge of the European economy fell unexpectedly in September, amid a resurgence in coronavirus cases that has dampened investor ardor toward the region's shares

Investors should rotate out of European equities into their emerging market (EM) counterparts, thanks to a divergence in the economic trends underlying the two asset classes, according to Citigroup.
 
The firm’s gauge of economic surprises is indicating a pattern disappointment in Europe, while remaining robust in emerging markets, wrote strategists including Jeremy Hale in an asset allocation note Thursday. Meantime, expectations for European earnings growth are the highest among developed markets and may be at risk of declining, they said.
 
“We think it makes sense to trim some developed-market specific risk at a time where near-term probabilities are