Vi e w p o i n t | 30 Dec 2025 23:24:00 ET │ 18 pages Asia FX and Rates Strategy Asia Flow Overview CITI'S TAKE December saw broad based inflows into Korean and Indonesian assets while India and Taiwan saw outflows. Foreign investments in Chinese fixed income declined for a seventh consecutive month, the trend was predominantly driven by the substantial sell-off in NCDs, whereas reduction in CGBs remained measured. Overall, aggregate portfolio inflows into EM Asia for 2025 totaled USD 59bn, characterizing t ...

Market Overview - The market experienced a mixed performance with the S&P 500 rising by 0.66%, the Nasdaq declining by 0.03%, and the Dow Jones increasing by 0.19% [1] Banking Sector - The banking sector saw widespread gains, with Goldman Sachs surging by 4.02%, Morgan Stanley increasing by 2.46%, and other major banks like Bank of America, Citigroup, JPMorgan, Zions Bancorporation, and Alliance West Bank all rising by over 1% [3] Technology Sector - The technology sector displayed continued divergence, highlighted by Intel's significant increase of 6.72% and AMD's rise of 4.35%. However, notable declines were observed in Netflix, which fell by 3.95%, Tesla down by 2.59%, and Microsoft decreasing by 2.21%, with Amazon and META also experiencing declines of over 1% [3] Chinese Concept Stocks - Chinese concept stocks experienced a strong rally, with the China Golden Dragon index rising by 4.38%. Baidu saw a remarkable increase of 15.03%, while Bilibili rose by 7.24%, NetEase by 7.22%, Alibaba by 6.25%, and Tencent Holdings and iQIYI also saw gains exceeding 5% [3] Gold Market - The COMEX gold market experienced volatility, initially rising by 1.91% before closing slightly up by 0.02% at $4341.9 per ounce. The intraday trading range saw a low of $4340 and a high of $4414.8 [3]

Core Viewpoint - Citigroup Inc. is recognized as one of the 20 Best Performing Dividend Stocks in 2025, indicating strong investor confidence and performance expectations for the company [1]. Group 1: Company Operations and Financial Performance - Citigroup plans to sell its remaining operations in Russia, anticipating a pre-tax loss of $1.2 billion in Q4 2025 due to this exit [2]. - JPMorgan maintains an Overweight rating on Citigroup, expecting a modest improvement in Citi's capital ratio post-sale, as it will reduce risk-weighted assets [2]. - In Q3 2025, Citigroup's revenue increased by 9% year-over-year, with earnings per share rising to $1.86 from $1.51 in Q3 2024 [3]. - Adjusted earnings, accounting for one-time items related to an asset divestiture, would have been $2.24 per share, highlighting significant year-over-year improvement [4]. - The return on average tangible common equity increased by one percentage point compared to the previous year, reflecting enhanced profitability [4]. Group 2: Company Profile - Citigroup operates as a global financial services firm, providing a range of services including banking, credit, investment, and wealth management to various clients including individuals, businesses, governments, and institutions [4].

Group 1 - The core viewpoint of the article indicates that Citigroup's report forecasts Macau's gaming revenue for December 2025 to reach MOP 20.888 billion, averaging approximately MOP 674 million per day, representing a year-on-year growth of 15% and about 91% of the levels seen in December 2019 [1] - The report highlights that the December 2025 revenue figure is about 5% lower than Citigroup's predictions and 3% below market expectations, primarily due to unusually low VIP room win rates, likely below 3% [1] - For the entire year of 2025, Macau's total gaming revenue is projected to be MOP 247.4 billion, reflecting a year-on-year increase of 9%, surpassing the Macau government's initial forecast of MOP 240 billion and the revised estimate of MOP 228 billion [1] Group 2 - Looking ahead to January 2026, Macau is set to kick off a series of exciting events, including the "Music Connection Plan 2" hosted by Jiangsu TV and iQIYI on January 2, and a Super Junior concert at the Galaxy Macau from January 9 to 11 [1] - Citigroup maintains its forecast for January 2026 gaming revenue at MOP 21.5 billion, averaging about MOP 694 million per day, which implies an 18% year-on-year growth [1] - For the combined gaming revenue forecast for January and February, accounting for the lunar new year timing differences, the estimate stands at MOP 42 billion, indicating a year-on-year growth of 10.5% [1]

Group 1 - Citigroup Inc. has approved the sale of its Russian unit, AO Citibank, to Renaissance Capital, with the transaction expected to result in a pre-tax loss of approximately $1.2 billion due to currency translation [3][5] - The deal is anticipated to close in the first half of 2026, following years of consideration for an exit from Russia amid increasing US and EU sanctions [4][3] - The divestiture is expected to enhance Citigroup's CET1 Capital by deconsolidating associated risk-weighted assets [5] Group 2 - Citigroup's decision to exit Russia aligns with similar actions taken by other financial institutions, such as Goldman Sachs, which also received approval to sell its Russian operations [4] - The bank had already begun winding down consumer and local commercial banking in Russia prior to the invasion of Ukraine in 2022, limiting its institutional banking services to meet legal and regulatory obligations [4]

Core Viewpoint - U.S. financial markets are experiencing a pause for the New Year's Day holiday, with trading set to resume on January 2nd, 2026. Despite a recent pullback, 2025 was a strong year for major stock indexes, which posted significant gains. Market Performance - On December 31st, 2025, major U.S. stock indexes closed lower, continuing a four-session losing streak. The Dow Jones Industrial Average fell 0.6% to 48,063.29, the S&P 500 declined 0.7% to 6,845.50, and the Nasdaq Composite dropped 0.8% to 23,241.99. Trading volume was light as many institutional investors had closed their books for the year [2][3]. - Sector performance was predominantly negative, with technology stocks being a major drag. The Energy Select Sector SPDR rose 0.8%, while the Information Technology Select Sector SPDR, Financials Select Sector SPDR, and Industrials Select Sector SPDR all declined by 0.3% [4]. Notable Stock Movements - Ares Management Corporation saw a share decline of 3.4%. Micron Technology and Western Digital experienced drops of 2.5% and 2.2%, respectively. Corcept Therapeutics shares plunged significantly after the FDA did not approve its treatment. Conversely, Nike shares rose 4.1% following the CEO's purchase of approximately $1 million in company stock [5]. Year-End Market Drivers - The strong performance in 2025 was largely driven by optimism surrounding artificial intelligence, with companies like Micron Technology, Palantir, Advanced Micro Devices, Alphabet, and Nvidia being significant contributors. The S&P 500 finished 2025 up approximately 16.4%, the Nasdaq Composite surged around 20.4%, and the Dow Jones Industrial Average added roughly 13% [6]. Upcoming Economic Data - Key economic data releases are scheduled for early January, including Initial Claims data and Construction PDF on January 2nd, ISM Manufacturing index on January 5th, and various employment reports on January 7th. Important inflation indicators like the Consumer Price Index and Producer Price Index will be released on January 13th and 14th, respectively [8]. Federal Reserve Meeting - The U.S. Federal Reserve's Federal Open Market Committee meeting is set for January 28th, where market participants will seek guidance on monetary policy for 2026, particularly regarding inflation and potential interest rate adjustments [9]. Upcoming Earnings Releases - The earnings season for Q4 2025 will begin to gain momentum later in January, with notable companies like BHP Group, JPMorgan Chase, and Bank of America expected to report. These earnings will provide critical insights into corporate performance and outlooks for the new year [10].

Summary of Key Points from the Conference Call on Stablecoins Industry Overview - The report focuses on the **stablecoin** market and its evolution, highlighting its role in the broader **blockchain** and **digital asset** ecosystem [11][24][25]. Core Insights and Arguments 1. **Market Growth Projections**: - Stablecoin issuance is forecasted to reach **$1.9 trillion** in the base case and **$4.0 trillion** in the bull case by 2030, revised from previous estimates of **$1.6 trillion** and **$3.7 trillion** respectively [13][30]. - The issuance volume has increased from approximately **$200 billion** at the start of 2025 to about **$280 billion** [12][53]. 2. **Drivers of Growth**: - Growth is primarily driven by the **crypto-native ecosystem**, **e-commerce**, and **international demand** for holding USD [25]. - The report emphasizes that stablecoins will coexist with other on-chain money formats, particularly **bank tokens** [25][26]. 3. **Institutional Adoption**: - Institutional adoption of stablecoins is still in its early stages, rated at **0.5** on a scale of 0 to 10, but interest is growing among banks and asset managers [57]. - Transaction volumes in stablecoins are approaching **$1 trillion per month**, nearly double from the previous year [57][62]. 4. **Transaction Velocity**: - Stablecoins could support nearly **$100 trillion** in transaction activity by 2030 under the base case, with the bull case suggesting up to **$200 trillion** [30][89]. 5. **Regulatory Environment**: - The passage of the **GENIUS Act** is seen as a game changer for stablecoin legislation, promoting innovation and consumer protection [36][37]. - Regulatory clarity is expected to drive further institutional adoption and integration of stablecoins into existing financial systems [66][67]. 6. **Bank Tokens vs. Stablecoins**: - Bank tokens, which offer trust and regulatory safeguards, may see transaction volumes exceed those of stablecoins by 2030 [17][26]. - The report suggests that bank tokens could become a preferred choice for many corporates due to their integration with existing financial systems [92]. Additional Important Insights - **Ecosystem Integration**: Major payment networks are beginning to support stablecoin settlements, facilitating easier adoption for end-users [72]. - **Global Trends**: The report notes that while the U.S. is a significant market, regions like **Hong Kong** and the **UAE** are also becoming active hubs for stablecoin development [30][72]. - **Use Cases**: Stablecoins are increasingly being recognized not just for crypto trading but as infrastructure for **24x7 liquidity** and **real-time money movement** [62][104]. - **Challenges**: Despite the positive outlook, challenges remain for wider adoption, including regulatory hurdles and the need for interoperability among different digital money formats [45][75]. This summary encapsulates the key points discussed in the conference call regarding the stablecoin market, its growth potential, and the evolving regulatory landscape.

Core Viewpoint - Citigroup has received board approval to divest its last operational entity in Russia, AO Citibank, to Renaissance Capital, marking the end of its withdrawal from the Russian market amid geopolitical tensions [1][2] Group 1: Divestiture Details - The divestiture is part of Citigroup's strategy to reduce its exposure to Russia, initiated after the 2022 invasion of Ukraine and subsequent international sanctions [2] - The transaction is expected to result in a pre-tax loss of approximately $1.2 billion in Q4 2025, translating to about $1.1 billion after taxes, primarily due to currency translation adjustments [3][4] - Citigroup plans to reclassify its remaining Russian assets as "held for sale" in the current quarter's financial reporting [4] Group 2: Financial Implications - The divestiture is anticipated to strengthen Citigroup's capital position by offloading risk-weighted assets, positively impacting its Common Equity Tier 1 (CET1) ratio [5] - The deal is projected to be finalized in the first half of 2026, pending regulatory approvals [5] Group 3: Strategic Alignment - This move aligns with CEO Jane Fraser's strategy to streamline operations and focus on higher-return areas such as wealth management in Asia and the Middle East [6] - The sale reflects a broader trend of Western banks retreating from Russia due to strict exit rules and high costs associated with departures [6] Group 4: Renaissance Capital's Position - For Renaissance Capital, the acquisition aims to enhance its domestic presence by absorbing clients and infrastructure left by foreign banks [7] - The transaction highlights how geopolitical risks are reshaping international banking, emphasizing stability over expansion in volatile markets [7]

Group 1 - Citi has received internal approval to proceed with the sale of AO Citibank, which manages its remaining business in Russia, to Renaissance Capital (RenCap) [1] - The sale is expected to be signed and closed in the first half of 2026, pending regulatory clearance and other conditions [1] - Citi will report its Russian business as "held for sale" starting from the fourth quarter of 2025 [1] Group 2 - Citi anticipates a pre-tax loss on the sale of nearly $1.2 billion (approximately $1.1 billion after-tax) in the fourth quarter of 2025, primarily due to currency translation adjustment (CTA) losses [2] - These CTA losses will remain in Accumulated Other Comprehensive Income (AOCI) until the transaction closes, and the total impact is expected to be capital neutral to Citi's Common Equity Tier 1 (CET1) Capital [2] Group 3 - In November 2025, Russian President Vladimir Putin authorized the sale of Citibank's remaining Russian operations to RenCap through a presidential decree [3] - Citibank was one of the largest foreign-owned banks in Russia, servicing major US firms [3] - Citigroup announced plans to wind down its consumer and commercial banking activities in Russia in August 2022, with initial talks involving entities like Expobank and Reso-Garantia [3] Group 4 - A limited number of Western banks continue to operate in Russia, including Raiffeisen Bank, UniCredit, and OTP [4] - In December 2024, Citigroup began introducing new artificial intelligence (AI) tools to its global workforce, with around 140,000 employees set to gain access [4]

Core Viewpoint - Citigroup has increased its long position in China People's Property Insurance Company Limited - H shares from 6.98% to 7.04% as of December 23, 2025 [1] Group 1 - Citigroup's long position in China People's Property Insurance Company Limited has seen a rise [1]