Citi says Europe’s allocation value is rising in global portfolios, with fiscal policy and AI diversification as key drivers

智通财经2026/08/24 10:06

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Citi strategists point out that the allocation value of European equities in global investment portfolios is strengthening, driven by improvements in the Eurozone macro environment, earnings recovery, and fiscal support. These factors have led European stocks to outperform most markets this year.
Over the past three months, the Euro Stoxx 50 Index has risen approximately 8%, outperforming the S&P 500’s gain of about 5%. Cyclical sectors have generally led the gains, economic surprise indicators have improved significantly, and earnings revisions are showing a comprehensive recovery. Historically, these trends are highly correlated with relative excess returns for European equities.
Fiscal policy has shifted from being a drag to providing support. Citi economists estimate that fiscal measures will contribute about 30 basis points to Eurozone GDP growth this year, though in 2025 they will act as a net drag.
Europe’s role as a diversification tool for AI trading is increasingly prominent. The region’s relatively low technology weighting means that during AI sentiment volatility, it could actually outperform. Some companies benefit from AI spending, but the underweighting in technology provides unique portfolio hedging value.
Citi maintains a neutral rating on European equities overall, mainly due to persistent geopolitical risks. However, it believes that if global market breadth expands further, Europe will be among the primary beneficiaries.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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Citi says Europe’s allocation value is rising in global portfolios, with fiscal policy and AI diversification as key drivers

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