Citi’s Manthey Says Worst Looks Over for Europe Cyclical Stocks Matt Clinch, Tom Mackenzie and Guy Johnson European stocks tied to the health of the economy offer an attractive entry point after a difficult stretch, as improving data and policy support suggest the worst may be over for some of the region’s hardest-hit industries, according to Citigroup Inc.’s Beata Manthey. Citi’s economic surprise indexes, earnings revisions across a broad set of sectors, and rising business activity over the summer are evidence that the region is moving in the right direction, said Manthey, the bank’s head of European equity strategy."Autumn is a very good time to go into cyclicals," she said in a Bloomberg Television interview, while urging a selective approach. "Overall, what you could assume is that perhaps the worst is behind them," she added, saying investors should at the very least consider removing their underweight positions. European policymakers are taking meaningful steps to protect industries caught between US protectionism and an assertive China, Manthey said, citing autos and chemicals as sectors that have faced severe pressure but may now be through the toughest period.

A recently introduced steel tariff regime — modeled on US measures — has already pushed domestic prices higher while benefiting European steelmakers who avoid the levy, she said. Manthey described this as "a good example of how protectionism could actually work in Europe’s favor." The broader strategic case Manthey outlined rests on Europe building economic resilience through preferential procurement — buying European — and targeted tariffs. The key risk to the thesis remains energy prices: a genuine tailwind for hard-pressed industrial sectors would require a sustained decline that geopolitical conditions have so far prevented.

On positioning, Manthey said Citi favors domestic stocks over internationally exposed exporters and consumer names, despite the latter’s recent resilience. Produced with the assistance of Bloomberg AI.