In its Asia equity strategy report, Citi said that Asian stock markets continued to outpace their global peers despite macroeconomic volatility. With US tariff issues clouding the short-term outlook, Citi's equity strategists remained constructive on the mid-term prospects.In Citi's estimate, the MSCI Asia ex-Japan will deliver a return of around 7% by mid-2026, corresponding to a projected P/E ratio of 14 times. Among Asian equities, the broker was particularly optimistic about China's and South Korea's markets, citing better trends in corporate EPS revisions, reasonable valuations, and benefits from structural themes such as AI and corporate governance reforms.Related NewsBofAS Reduces LI NING (02331.HK) 2025 Earnings Forecast by 8%, Reiterates Rating at NeutralCiti set a year-end target of 25,000 and a mid-2026 target of 26,000 for the HSI. In its MSCI China sector weighting model portfolio, the broker upgraded the consumer sector from Neutral to Overweight, favoring domestically oriented stocks and preparing for potential government stimulus. The transportation sector was downgraded from Overweight to Neutral due to downside risks in global freight volumes amid rising US trade tariffs. For the Chinese market, the broker gave an Overweight rating to the internet, technology, and consumer sectors.