Citi shifts focus to Taiwan

What happened

Citigroup revised its Asian market investment strategy, upgrading Taiwan equities and downgrading China equities. This adjustment reflects Taiwan's pivotal role in the global AI supply chain, anticipating stronger financial performance and a more promising earnings outlook for Taiwanese companies. Conversely, concerns regarding the earnings potential of Chinese stocks led to their downgrade. This action highlights the increasing influence of technological specialisation on investment decisions.

Why it matters

This strategic shift introduces a tightened dependency on specific geographic regions central to critical technology supply chains, specifically Taiwan for AI manufacturing. It increases exposure for procurement and supply chain risk management teams to geopolitical and economic volatilities associated with concentrated production hubs. This raises due diligence requirements in assessing supply chain resilience and potential disruptions stemming from such dependencies.