Citi has downgraded South Korea's stock market rating to neutral while upgrading China to overweight

Citigroup has downgraded the rating of the South Korean stock market from overweight to tactical neutral, due to the severe fluctuations in chip stocks in recent weeks. The institution aims to reduce exposure to the AI theme. The Korea Composite Stock Price Index was one of the best-performing stock markets globally this year, benefiting from the AI trading boom, but has recently experienced significant volatility due to retail enthusiasm for single-stock leveraged ETFs and valuation concerns. Citigroup stated that almost all client discussions are now refocusing on the prospects of an expanded market performance in the second half of the year, but they remain cautious about a complete withdrawal from the technology sector in emerging market allocations.

Citigroup maintains a structurally bullish outlook on the AI theme while upgrading its rating on China to overweight.