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Citi Expanding and Focusing on Asian Market in QE3

October 16, 2012 | About:
Muhammad Bazil

Muhammad Bazil

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Citi, the leading global bank that has approximately 200 million customer accounts and does business in more than 160 countries, is expanding and focusing on the Asian market.

Citi's Securities and Fund Services, a division of Citi Transaction Services, on Oct. 5, 2012, announced that it is the first international custodian bank to offer securities lending services on the National Stock Exchange (NSE) in India. This launch reinforces Citi's dominance in the emerging markets globally, making its proprietary OpenLendSM platform now available in 72 markets internationally.

In another movement, Citi and Air Asia have further strengthened their partnership with the introduction of two new cards for the savvy Malaysian consumer. The Air Asia-Citibank Visa Platinum and Air Asia-Citibank Visa Gold Credit Cards offer new benefits that include Air Asia X Premium Flatbed upgrades, free in-flight meals and free pick a seat.

Although economies are booming in most Asian countries, uncertainty and risks still exist. Economists in Asian Pacific countries addressed the growth risk in Asia as far higher, and the response is expected to be more favorable now than compared to the QE2 period. Those concerns basically came from the impact of QE3 on Asia's monetary policy stance, such as opposing factors of a potential rise in inflation and asset price concerns weighed against wanting to dissuade FX gains from speculative capital inflows and mounting sterilization costs.

Across Asia

Philippines


It continues to be the largest foreign bank and remains the dominant wholesale and retail banking franchise. It is the only foreign player that has entered and consistently ranks among the top 10 commercial banks in the country.

Indonesia

Citi Indonesia, the Overseas Private Investment Corporation (OPIC) and Bank Andara announced the closing of an $18.5 million U.S. term loan to fund the growth and strategy of Bank Andara's Microfinance business and promote the financial inclusion of micro entrepreneurs and small businesses in Indonesia. This loan will be disbursed in two periods within six months. This is also the second one from Citi and OPIC for the microfinance sector in Indonesia and is a part of Citi's and OPIC's joint global initiative to support microfinance lending in emerging markets worldwide.

Thailand

With a more positive risk tone and prolonged low rates, capital inflows could be particularly strong in the country with strong fundamentals and higher yields, Bangkok Sentral ng Pilipinas (BSP) may be more inclined to keep lower rates.

Vietnam

Vietnam has uncomfortably high inflation at their growth-inflation cycle and is constrained from raising inflation further as a result of QE3. Similarly, central banks are predisposed to have sensitivity to asset/property price concerns and can be particularly more guarded on policy easing.

Korea

Korea is less keen to see FX outperformance, with benign inflation, they may have more incentive to cut; although Korea as a prime candidate in Asia may have more incentive to ease monetary policy to deter capital inflows in a QE3 environment, given its current growth-inflation dynamics. And the sensitivity to commodity prices is low, but growth is more resilient, food and energy prices are highly subsidized.

Outside Asia

U.S. growth was losing momentum on subpar consumption recovery and weak housing. Back in 2010, it was still running at 2+ percent growth momentum versus the current 1.5 to 2.0 percent trajectory – a figure now seen as being close to 'stall speed' – while the Eurozone is in a deepening recession. Despite some easing financial stress in the periphery, the impact of austerity programs and de-leveraging, on top of possible Greek euro area exit concerns, will likely continue to weigh on the economy for a while.

Summary

Citigroup, founded in 1812, is celebrating its 200th anniversary as a global company. Citi will continue to be the largest foreign bank and remains the dominant wholesale and retail banking franchise. In most Asian countries Citi has entered it consistently ranks among the top 10 commercial banks in those countries.

Citi is hosting an international roadshow covering six cities in Asia, Europe and the U.S. to leverage on its global network, bringing BDO management to 70 institutional investors. Those policymakers and major banks in Asian countries are in favor of Citi and proud to participate in the event. They have been working closely with the client to achieve and gain more market share despite volatile markets and amidst the euro zone debt crisis.

Average Outlook of Citi at One Glance

Bank shares in general are going down in today’s market. Citi shares are obviously declining as they have been fluctuating and decreasing, and still do so, mainly caused by uncertainty and risks occurring in Asian countries, where lending power is weak and high inflation rates are widespread. This trend will continue until confidence has fully recovered and inflation ceases. No matter what economic issues exist, Citi will continue its expansion policy in most Asian countries to gain more market share in the next half year and a bullish situation will remain until the end of this year. The potential investor is advised to buy at the breakout. Buying now is advised as banking stocks still remain extremely volatile.

About the author:

Muhammad Bazil
Muhammad Bazil is a financial journalist and editor for a variety of websites, public policy organizations, and book publishers. He has written hundreds of published articles and blog posts on topics including budgeting, credit management, real estate and investing. His articles have been featured on the homepage of Yahoo!, MSN and numerous local news websites.

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