Citigroup warns Trump’s policies may slow growth in emerging markets

Citigroup analysts anticipate that emerging market stocks will underperform compared to global peers following Donald Trump’s recent victory in the U.S. presidential election, despite China’s recent policy initiatives and global economic growth. The brokerage said in a note it expects Trump’s trade policies to be a drag on global growth, while consequent U.S. dollar strength could further pressure emerging market assets.
It expects Saudi Arabia and India to be less exposed to trade risks, and upgraded the top oil exporter to “overweight” from “underweight”. But downgraded India to “neutral” from “overweight”, citing stalling earnings growth and pressure from foreign investors selling following China’s recent policy support measures.
Citigroup forecast India’s Nifty 50 index to touch levels of 25,000 by September 2025 – an about 6% rise from its last close. It lifted South Africa’s rating to “overweight” from “neutral”, pointing to attractive profit growth and possible tailwinds from China’s stimulus measures. It slashed ratings on South Korea to “underweight”, citing weaker corporate profit growth in the country. The brokerage also warned that increased trade policy uncertainty could weigh on Korea’s economy and hurt its exports to the United States. But believes Korea’s KOSPI index could touch 2,800 points by mid-2025 – a 16% rise from current levels. Citigroup expects momentum from a recovery in semiconductor earnings and the local central bank’s interest rate cuts to further support the index into the second half of 2025.