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Citi Downgrades U.S., Upgrades China
VW Warns of Economic Challenges and Oracle Eyes Growth Despite Market Drop
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FINANCE
Citi Downgrades U.S., Upgrades China
Citigroup has downgraded U.S. equities to neutral while upgrading China to overweight, signaling a growing divergence between the world’s two largest markets. Citi’s strategists, led by Dirk Willer, noted that “U.S. exceptionalism is at least pausing” for the next few months, citing weaker economic data and potential market headwinds. HSBC also cut its outlook on U.S. stocks, citing better opportunities elsewhere.
Meanwhile, Chinese equities are surging, driven by DeepSeek’s AI breakthrough, government tech-sector support, and attractive valuations. A 20% jump in Chinese stocks listed in Hong Kong has outpaced the 4.5% decline in the S&P 500 this year. The shift extends to tech, with a basket of China’s top tech firms gaining 40%, while the Magnificent Seven stocks fell 10%.
HSBC also upgraded European equities, pointing to Germany’s spending boost and expected euro-zone fiscal stimulus. As global markets shift, China and Europe emerge as key investment destinations.
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FINANCE
VW Warns of Economic Challenges
Volkswagen reported a 15% drop in annual operating profit for 2024, citing rising costs and restructuring expenses. Revenue increased to €324.7 billion ($352.8 billion), up from €322.3 billion in 2023. The automaker expects up to 5% sales revenue growth in 2025, with an operating margin between 5.5% and 6.5%.
Despite a 3.5% decline in vehicle sales, Volkswagen called 2024 a “solid year in a challenging environment.” Shares rose 2% in early London trading on Tuesday. The company proposed a 30% dividend cut, offering €6.30 per ordinary share and €6.36 per preferred share.
Volkswagen ended 2024 with €36 billion in net liquidity, down 10.5% year-on-year, and expects €34-37 billion in 2025. It warned of political uncertainty, trade restrictions, and rising competition. CFO Arno Antlitz acknowledged “global economic challenges” but emphasized Volkswagen’s commitment to financial stability and industry adaptation amid evolving market conditions.
TECH
Oracle Eyes Growth Despite Market Drop
Oracle chairman Larry Ellison highlighted the company’s cost advantage in AI during a call with analysts after a sharp market decline. He emphasized that faster processing at lower costs gives Oracle an edge in securing large cloud contracts, including its role in the $500 billion Stargate AI project alongside OpenAI, Nvidia, and Microsoft.
CEO Safra Catz reported that Oracle’s remaining performance obligations (RPO)—the value of future contracts—jumped 63% to $130 billion, signaling strong demand. She projected 15% revenue growth in the next fiscal year, despite some fluctuations.
Oracle’s Q4 earnings missed expectations, reporting $14.13 billion in revenue versus a projected $14.38 billion, with shares falling 4%. However, Ellison remained optimistic, calling Stargate the biggest AI training project yet and expecting major contracts soon. Catz reaffirmed steady long-term growth, stating, “We now have a clear line of sight to our future revenue growth.”
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.