Subscribe

feed image

Our FX reports

Adam Solomon's insight into business and corporate FX issues.
Your Questions on foreign exchange sent direct to the professionals.
The Economy News brings you the latest foreign exchange rate news.

FX Latest

INSIGHT

Forex markets await the stress test
Mark Deans at MoneyCorp gives his morning verdict on the forex markets.Read more...
Standard Chartered warn of increased likelihood of double dip recession
Standard Chartered researchers say premature fiscal tightening could cause double dip recession....Read more...
Conservative dogma: The profound challenges of austerity
Why the Irish debacle of spending cuts is so important to Britain and dispelling the pro-austerity...Read more...
Israel vs Turkey: Concerns for the future of NATO
So what would be the consequences in the unfortunate event that Israel found itself in an armed...Read more...
Barclays: Not having a bank account costs £1000
A new report is issued by Barclays that looks at the challenges of increasing financial inclusion...Read more...
Home Markets Markets Citigroup Inc share riot continues
Citigroup Inc share riot continues PDF Print E-mail
Written by Will Peters   
Friday, 12 March 2010 11:09
Citigroup announces profitable future, shares still seen as cheap.



Citigroup Inc (NYSE:C) has had a hot week on Wall Street and will be hoping that the latest news concerning its profitability will seal a week of gains.

In a Citigroup conference at the Waldorf Astoria, Citigroup Inc Chief Executive Vikram Pandit said the bank is shedding risky mortgage assets and shifting focus to emerging markets like Latin America and Asia.

Citigroup shares closed 5.56% higher yesterday at 4.18, on Tuesday the stock shot up by 7.30% to hit the 3.82 mark.

Citigroup now says it is well positioned to benefit from faster growing products and geographies.

For the long term, the company sees growth in emerging markets, and its strategic implication is to capitalize and expand established emerging markets footprint, and capture increasing cross-border trade and payment flows, globally, and intra- regionally.

The company's strategies over the long term also include lower reliance on wholesale funding, focus consumer strategy on key metropolitan areas and digital distribution, and refocus strategy on clients, not products.

Citigroup expects industry revenues from emerging markets to grow faster than revenues in developed markets. Emerging markets are likely to represent over 55% of potential revenue growth, the company noted.

In 2009, total industry revenues were $3.2 trillion, comprising $1 trillion in emerging markets and $2.2 trillion in developed markets. Citi expects compound annual growth rate, or CAGR, of 7% in industry revenues by 2012 to $3.2 trillion, and expects 12% industry revenue growth by 2012 in emerging markets, to revenue of $1.4 trillion, compared with 5% revenue growth in developed markets, to $2.5 trillion, in that period.

In 2009, Citi's total revenues were $60 billion, of which 54% of revenues were from developed markets and 46% from emerging markets.

Citigroup Inc shares: Is the price right?


Volume on US markets has been high this week, on Tuesday activity was nearly three times the typical number of shares changing hands compared with the previous 30 sessions.

Citigroup shares are still well off the $5.43 high they hit in late August when the bull market spurred higher, but they have still nearly quadrupled from the 99-cent nadir they fell to one year ago Tuesday.

Out of the 28.48 billion shares outstanding of Citi, about 447.8 million are shorted, which can also make a slight rally spike higher in intraday trading.

Trading in Citigroup's call options, which convey the right to buy the stock, was also noteworthy Tuesday. Traders appeared to have an eye toward next month as they topped the open interest in Citi's April $4 calls. At a price of 16 cents, holders of the contract stand to make money if the stock tops $4.16 before April 16.

Analysts at CrediSights said late Monday that Citigroup Inc is "back from the brink and back in business," calling the stock "just plain cheap." The analysts did concede that there remains work to be done.

Meanwhile, in an interview with Fortune magazine, Bruce Berkowitz, the manager of the $11 billion Fairholme fund, said he bought more than $700 million in Citi shares recently and thinks the worst is over for holders.

"The price is right," Berkowitz said in the Fortune story. "It's just a question of when it becomes obvious to everyone that the worst is over."
Last Updated ( Friday, 12 March 2010 11:12 )