(Reuters) -Citigroup has double downgraded UK equities to “underweight” from “overweight”, while upgrading Emerging Markets (EM) to “overweight” in a strategic pivot toward cyclical and AI-driven growth opportunities.

Analysts at Citi raised their mid-2026 target for the MSCI EM index to 1,465, implying ~7% upside from current levels, while raising their target for the FTSE 100 to 9,700 from 9,300, implying more modest upside from current levels over the same time period.

The brokerage in a note on Friday said that the UK’s 50% exposure to defensive sectors such as consumer staples and utilities makes it less attractive in a market environment increasingly favouring cyclical and growth-oriented plays.

While economic activity has held up, Citi noted that UK growth has been driven by fron

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