Citigroup upgrades China's stock market to Buy and downgrades US stocks, calling the "American exception" over.

Citigroup strategists downgraded US stocks to neutral from buy and upgraded China stocks to buy, saying the "American exceptionalism" at least paused. Citigroup's global head of macro research and asset allocation, Dirk Willer, wrote in a note that Citigroup has been overweight US stocks since October 2023, but the cracks in US stocks' ability to outperform have become more apparent. Meanwhile, he said, China's stock market looks attractive even after the recent rebound, considering the breakthroughs in artificial intelligence technology by DeepSeek, government support for the technology sector, and still low valuations. Willer wrote: "The narrative of American exceptionalism is unlikely to re-emerge at least from a tactical perspective in the coming months, as the news from the US economy may lag the rest of the world." He added that the neutral view on US stocks was in a three- to six-month time frame, with more negative data expected to be released from the US. After President Trump launched a trade war and continued to cut spending, sentiment on US stocks deteriorated rapidly, exacerbating concerns about the US economy. While the S&P 500 has fallen 4.5 per cent so far this year, the A-share index listed in Hong Kong has surged 20 per cent, becoming one of the best performers in 2025.