Global markets started 2017 fearing, among others, a disruptive United States and growing political risks in Europe. But neither of those has turned out to be damaging thus far, Citi Private Bank said in its mid-year review.

That said, generating double digit returns will not be “quite as easy” in the coming months compared to the first half of 2017, the bank’s global chief investment strategist Steven Wieting said on CNBC’s “The Rundown” Thursday.

“You haven’t seen hyper stimulus in the United States from the U.S. Congress and I think we could find that they can act at some point, (but) it’s going to be scaled back and the disruptive effects around the world will not occur … And that is a pretty optimistic view,” he said.

While the bank has kept its view that the global economy will prove more resilient than previously anticipated, it has raised its allocations to global equities, decreased its holdings in certain fixed income assets such as U.S. high yields and diversifying more into emerging markets.

Citi Private Bank has in the last four years been largely cautious on emerging markets. That was because the greenback was strengthening, which raised external debt burdens for most emerging market borrowers.

The rising U.S. dollar and interest rates could still harm those borrowers but many emerging markets are now in better fiscal positions to withstand a tightening cycle in the U.S., the bank said in its mid-year outlook report. They are also less reliance on foreign funding, thus less exposed to a sudden outflow of funds, Citi said.

“In fact, we think the U.S. dollar is in a peaking process so you have to think of the effect in this region and other emerging markets that this whole combination is one that looks a lot like 2016. A lot of the things that worked through real growth industries will continue to work as investments,” Wieting said.

“We feel comfortable now allocating to emerging markets, which are at near record discount valuations to the United States and (we are) in fact broadening out to international assets generally,” he added.

Across emerging markets, equities are valued at a 45 percent discount to U.S. equities based on their 10-year cyclically-adjusted price-earnings ratio — not far from the record during the technology boom in late-1990s, the bank said in its review. Local currency government bonds in emerging markets on average also yield six times more than euro zone firms of all credit ratings.

Citi Private Bank is overweight both emerging market equities and fixed income. For Asian equities, the bank’s picks are Hong Kong, China, India and Indonesia. The local debt markets in India and Indonesia are also favored.

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