Citi Private wary on emerging markets

By Jeffrey Hodgson and Saeed Azhar

SINGAPORE (Reuters) - Citigroup's private banking arm is warning wealthy Asian clients that emerging markets are likely to suffer further losses in coming months, particularly in countries where political uncertainty is high.

The firm is urging clients to favour defensive sectors like healthcare, utilities and infrastructure, as well as keeping their holdings diversified, said Jennifer Tay, Asia-Pacific head of portfolio counselling for Citi Private Bank.

"For the next few months, anything that is emerging markets oriented, they would have a further beating, that is what we anticipate," she told the Reuters Wealth Management Summit in Singapore.

"It doesn't help that the geo-political situation in this area is also not great, Thailand and the situation there and Russia for example."

The Singapore-based executive noted many emerging markets have heavy exposure to beaten-down commodity prices and that corporate failures are likely to increase across Asia as the global financial crisis, and its impact on access to credit, drives weaker firms to insolvency.

Asian and emerging markets and value-oriented funds have been the two worst recommendations the bank has made to clients in the past year, she said, adding one of its best call was to encourage them to cut commodity exposure about 4 months ago.

DASH TO CASH

Citi's Asia Pacific wealth management unit, which includes Citi Private Bank, helps oversee more than $300 billion in assets. The private bank focuses on clients with a net worth of at least $10 million.  Continued...