[Citi Upgrades China's Stock Market to 'Overweight,' Predicts 'Breadth Expansion' in Emerging Markets in the Second Half of the Year] According to a report by Jinse Finance, on July 20, Citi released its Emerging Markets Equity Strategy Outlook for the second half of 2026 on July 19. The report primarily explores whether market performance will shift from being led narrowly by tech stocks to a broader 'breadth expansion.' It notes that while the MSCI Emerging Markets Index has performed strongly year-to-date, gains have been highly concentrated in tech stocks from South Korea and Taiwan. With macroeconomic data showing signs of cyclical improvement and increased volatility in AI-related trading, the market is positioned for breadth expansion. In terms of allocation, Citi upgraded China's rating to 'Overweight,' citing its potential as a candidate for breadth expansion, reasonable valuations, light positioning, and the likelihood of benefiting from global growth improvements and a low oil price environment. Meanwhile, it tactically downgraded South Korea's rating to 'Neutral' to address high volatility but maintained Taiwan's 'Overweight' rating due to its central role in the AI supply chain and strong earnings prospects. Additionally, Citi upgraded Mexico's rating to 'Neutral.' Citi remains optimistic about the MSCI Emerging Markets Index, setting a year-end target of 1,870 points (approximately 12% upside potential) and a mid-2027 target of 2,050 points. Despite heightened short-term volatility around the AI theme, Citi continues to recommend maintaining a core 'Overweight' position in AI/tech over a 6-12 month horizon, while also identifying potential opportunities in AI adopters within the industrial and healthcare sectors.