The market is 'adjusting' to oil, China: Citigroup's Corbat

The market is "adjusting" to a series of headwinds that can be overcome, Citigroup CEO Michael Corbat said Thursday, a day after the S&P 500 fell to its lowest level in nearly two years.

"We view what's going on really as more a repricing than any big fundamental shift," he told CNBC's "Squawk Box" at the World Economic Forum in Davos, Switzerland.

"The combination of China, oil and probably a different outlook of Fed stance or policy from probably just a month ago have people questioning portfolio mix, asset selection, and we think the market's adjusting to that," Corbat said.

Market volatility hit a level not seen since stocks sold off in September on China growth concerns. Wednesday's selling in equity markets was exacerbated as U.S. crude nearly broke through $26 per barrel, hitting its weakest price since May 2003.

But markets will not necessarily stay down, Corbat said. China's slowdown should come as no surprise, he asserted, and the current oversupply in oil markets that has sent sent crude prices plummeting and weighed on equities can be worked through.

This year will look much like 2015 in terms of economic growth, with the global growth likely to come in at roughly 2.5 percent, Corbat said.

"We're in a new paradigm right now where growth is probably going to be lower longer, and we've got economies, including the U.S. economy, that need to adjust to that," he said.

Citi expects the dollar to remain structurally strong, thereby holding back the U.S. manufacturing and export sectors for the foreseeable future, he added.

Corbat said he did not see panic in the markets and he attributed that to the fact that the U.S. economy, the financial system, and banks are much less leveraged than during the 2008 financial crisis.

Corbat said it was too soon to tell if regulations added since then have prevented another crisis or have increased risk by reducing market liquidity.

On the corporate side, he said, the outlook for businesses will remain "tough" in 2016, forcing executives to focus on expense discipline and manage shareholders through buybacks.

Mergers and acquisitions activity, which last year surpassed $5 trillion for the first time, will likely remain robust with valuations where they are, Corbat added.

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