12 Nov 2025 11:26:30 ET │ 13 pages Ac t i o n | India Economics Inflation at All-Time Low, But Will It Be Enough for RBI to Ease Further? CITI'S TAKE Headline inflation fell to an all-time low of 0.25%YoY in Oct-2025 (vs. revised 1.44% in Sep-2025). This decline was driven by a combination of favorable base effects, subdued food prices, and the impact of GST cuts. Both food and core inflation are at their lowest levels since the start of the CPI series. We think GST rate cuts have weighed down headline infl ...

Core Insights - Russian President Vladimir Putin has authorized Citigroup Inc. to sell its Russian banking unit, AO Citibank, marking a significant step in the bank's planned withdrawal from Russia [1][10] - The sale reflects Citigroup's strategy to streamline global operations and exit non-core markets [1] Details of the Sale - Citigroup has received Kremlin approval to transfer AO Citibank to Renaissance Capital, a Moscow-based investment bank, although the deal amount has not been disclosed [2] - The approval allows Citigroup to expedite operational preparations and secure remaining regulatory clearances necessary to finalize the sale [2][10] - The divestiture includes Citigroup's remaining consumer and institutional operations in Russia, with nearly all institutional services already closed [3] Financial Exposure and Future Steps - As of September 2025, Citigroup had approximately $13.5 billion in exposure tied to Russia, primarily in corporate dividends that the Russian government has restricted [4] - The sale is expected to accelerate Citigroup's operational wind-down in Russia, covering all remaining operations [5][10] Global Restructuring Strategy - Under CEO Jane Fraser's transformation strategy, Citigroup is reshaping its global footprint by focusing on core businesses and reallocating capital to higher-return areas like wealth management [6] - Recent divestitures include a 25% stake in Banamex and the sale of its consumer banking business in Poland, among others [6][7] - These initiatives are aimed at freeing up capital for investment in key wealth hubs, with expected annualized run-rate savings of $2–$2.5 billion and a projected return on tangible common equity of 10–11% by 2026 [8] Market Performance - Citigroup's shares have increased by 46.4% over the past year, outperforming the industry's growth of 28.9% [9]

Group 1 - The core viewpoint is that China's economy is expected to achieve a 5% growth target for 2025, with a similar target of around 5% for 2026, driven by the "14th Five-Year Plan" focusing on technological self-reliance and supply-demand rebalancing [1] - The "14th Five-Year Plan" emphasizes the importance of developing new productive forces and significantly improving the level of technological self-reliance, which aligns with market expectations and is seen as a key driver for future economic growth [1] - The plan also aims for a pragmatic approach to economic rebalancing, with a focus on building a national market and opposing excessive competition, while increasing household consumption rates and optimizing social security for sustainability [1] Group 2 - Preliminary estimates suggest that the pork and food cycles are likely to stabilize next year, with a recovery in service sector demand expected to lead to a rise in CPI [2] - Fiscal policy is anticipated to remain dominant and somewhat expansionary, with a projected general public budget deficit of 4% of GDP, and an increased focus on livelihood spending [2] - Structural measures are expected to be prioritized over cyclical policies to boost consumption, with a potential subsidy scale of 300 billion yuan for trade-in programs, aimed at expanding the range of applicable products and covering more rural areas [2] Group 3 - The external environment is expected to improve next year, with Chinese exports projected to maintain low single-digit positive growth despite a high base, making net exports a key driver of growth [2] - Currency fluctuations are anticipated, with a trend towards appreciation of the RMB, supported by factors such as purchasing power parity, rising trade surpluses, narrowing Sino-US interest rate differentials, and net inflows of cross-border capital [2]

Core Viewpoint - Bitcoin has experienced a significant decline after reaching an all-time high of over $126,000 in early October, dropping back toward the $100,000 level and briefly entering bear-market territory [1][2] Group 1: Reasons for Bitcoin's Price Decline - Initial investor concerns attributed the price drop to fewer expected Federal Reserve rate cuts; however, Citigroup analysts suggest that the decline is primarily linked to falling liquidity in the US financial system [2][3] - Key factors influencing liquidity include bank reserves held at the Federal Reserve and the US Treasury's General Account (TGA), which typically move in opposite directions; as the TGA increased this year, bank reserves decreased [4][14] - Bitcoin is particularly sensitive to liquidity changes, with analysts noting that while falling reserves usually impact equities negatively, Bitcoin may react more strongly due to its liquidity sensitivity [6][14] Group 2: Future Outlook for Bitcoin - Despite the recent downturn, Citigroup remains optimistic about Bitcoin's long-term prospects, expecting liquidity pressures to ease as the Federal Reserve signals a halt to tapering its balance sheet in December [8][10] - The TGA has been replenished to over $940 billion as of November 5, which Citigroup considers a sufficient level, indicating potential stabilization in liquidity conditions [9][10] - Citigroup has set a 12-month price target of $181,000 for Bitcoin, driven by its increasing status as a store of value and the ongoing "digital gold" narrative [11][13]

Group 1 - Goldman Sachs suggests that the Federal Reserve may soon announce "reserve management purchases," injecting liquidity into the market by buying short-term government bonds, which the market interprets as a signal for a new round of quantitative easing (QE) [1][3] - JPMorgan's CEO emphasizes that the current AI investment wave is not a market bubble but the beginning of a significant transformation in corporate operations, indicating that the market's expectations for AI's value exceed its current realizations, suggesting substantial potential [1] - Citi notes an improvement in credit outlook for peripheral Eurozone countries, with Italy, Spain, Portugal, Greece, and Ireland likely to receive credit rating upgrades by 2026 due to fiscal consolidation and resilient economic growth [1] Group 2 - Guggenheim's Chief Investment Officer indicates that the economic slowdown reflected in the Beige Book, along with pressures on low-income groups and small businesses, suggests a "dual-speed economy," leading the Fed to likely cut rates again in December [2] - Blackhawk Analytics reports that initial jobless claims in the U.S. slightly decreased to 227,500, indicating a stable labor market, which may support the Fed's decision to hold rates steady in December [2] - Morgan Stanley's economists assert that the current level of initial jobless claims is consistent with recent years, showing no signs of an escalating layoff trend, and that the government shutdown may have distorted data reporting [2]

Core Viewpoint - Citigroup has significantly reduced its positions in major AI-related tech stocks, reflecting concerns over an "AI bubble" and the sustainability of the AI investment trend, while simultaneously increasing positions in certain ASIC leaders like Broadcom [1][2]. Holdings Summary - Citigroup's total holdings value reached approximately $224 billion in Q3, up 10% from the previous quarter, with 826 new stocks added and 3,028 stocks reduced [1]. - The top ten holdings accounted for 19.48% of Citigroup's total U.S. stock market value, indicating a high concentration in these positions [1]. Major Stock Adjustments - Significant reductions were made in holdings of Nvidia, Microsoft, Apple, and Amazon, with Nvidia being the largest holding but reduced by 28.22% to approximately 33.39 million shares valued at $6.2 billion [2][3]. - Citigroup increased its position in the Russell 2000 ETF put options, reflecting a bearish outlook on small-cap stocks [3]. Specific Stock Positions - The second-largest holding was in Russell 2000 ETF put options, with approximately 23.99 million shares valued at $5.8 billion, an increase of 12.26% [3]. - Microsoft was the third-largest holding, with about 9.56 million shares valued at $5 billion, down 19.55% from the previous quarter [3]. - Tesla put options ranked fourth, with about 10.43 million shares valued at $4.6 billion, showing a slight increase of 6.84% [3]. Additional Insights - Citigroup's strategy included a significant reduction in positions in Apple and Amazon by 33% and 30% respectively, while increasing its stake in Broadcom, which is seen as a competitor to Nvidia in the AI GPU market [4]. - The firm also increased its holdings in Nasdaq 100 ETF put options by 81%, indicating preparation for potential declines in AI-related stocks [4][5]. - The top five sell-offs included Nvidia, Meta, Amazon, Microsoft, and Apple, further emphasizing Citigroup's cautious stance on the AI investment trend [5].

Core Insights - The article emphasizes the importance of quantitative research, financial modeling, and risk management in equity valuation and market trends [1] - It highlights the experience of the analyst in leading teams for model validation and stress testing, showcasing a deep expertise in both fundamental and technical analysis [1] - The collaboration between the analyst and their research partner aims to deliver high-quality, data-driven insights with a focus on macroeconomic trends and corporate earnings [1] Group 1 - The analyst has over 20 years of experience in the field, specializing in uncovering high-growth investment opportunities [1] - The approach combines rigorous risk management with a long-term perspective on value creation [1] - The focus is on providing actionable ideas for investors seeking to outperform the market [1]

Core Insights - The article emphasizes the importance of quantitative research, financial modeling, and risk management in equity valuation and market trends [1] - It highlights the experience of the analyst in leading teams for model validation, stress testing, and regulatory finance, showcasing a deep expertise in both fundamental and technical analysis [1] - The collaboration between the analyst and their research partner aims to deliver high-quality, data-driven insights with a focus on macroeconomic trends and corporate earnings [1] Group 1 - The analyst has over 20 years of experience in the field, specializing in uncovering high-growth investment opportunities [1] - The approach combines rigorous risk management with a long-term perspective on value creation [1] - The focus is on providing actionable ideas for investors seeking to outperform the market [1]

Core Insights - The conference reflects a shift from a "China for China" narrative to a broader interest from international investors and companies in the Chinese market, indicating a significant change in dynamics [2][3][6] - The recent truce in trade relations between the U.S. and China has provided stability, allowing both sides to focus on transactional relationships and mutual interests [3][10] - Citi's strategy in China emphasizes growth and innovation, with a focus on serving international clients and supporting Chinese companies in their global expansion [6][10][14] Company Strategy - Citi has divested from its consumer banking business and retail wealth management, focusing instead on international clients and cross-border needs [5][13] - The firm is experiencing growth in headcount and productivity, countering narratives of pulling back from China [7][8][18] - Citi aims to leverage technological advancements to enhance client service and operational efficiency, with a notable increase in productivity in coding teams [16][18] Market Outlook - The Chinese economy is transitioning towards advanced manufacturing and innovation, with a significant portion of global robotic companies based in China [10] - New trade corridors are emerging, particularly between Asia and the Middle East, indicating a shift in global trade dynamics [12] - The wealth management sector is expected to grow significantly in Asia, with a focus on high-net-worth individuals and mid-market companies [15][21] Financial Health - Citi's balance sheet is described as pristine, with over 80% of corporate assets being investment grade, reflecting a strong financial position [30][31] - The firm is optimistic about the U.S. market outlook heading into 2026, despite concerns about inflation and potential economic challenges [27][29] - There are indications of frothiness in certain market segments, but core infrastructure investments are expected to yield productivity benefits [33][34]

Core Insights - Citi's CEO Jane Fraser highlighted strong interest from investors and companies in China, indicating rapid growth in Citi's business within the country [1] - There is a notable influx of investors and companies seeking to understand the Chinese market, while Chinese firms and investors are increasingly looking towards overseas markets [1] Summary by Categories - **Investor Interest** - There is a significant amount of interest from investors in China, suggesting a positive outlook for investment opportunities [1] - **Business Growth** - Citi's operations in China are experiencing rapid growth, reflecting the overall trend of increasing engagement in the region [1] - **Market Dynamics** - Chinese companies and investors are becoming more focused on international markets, indicating a shift in investment strategies [1]