Gavekal Capital: MSCI Europe Mid-Year Check-Up

Tuesday, July 1, 2014

MSCI Europe Mid-Year Check-Up

Performance by countries in the MSCI Europe has been led by Italy and Spain while the Netherlands has struggled the most:

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On a sector basis, Utilities have gained the most while Information Technology stocks have faltered:

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Digging deeper, constituents of the Gold and Biotechnology sub-industries in Europe have both gained more than 30% this year:

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Conversely, Internet Retail stocks in MSCI Europe have declined by almost 50%-- largely in the last quarter alone:

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The ten best and ten worst performing members of the MSCI Europe so far this year are:

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Turning to a few indicators of internal market strength (or weakness), we find that the advance/ decline ratio continues to languish as the index gains:

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Cumulative net highs have deteriorated since the beginning of the year while the index has continued higher:

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The percent of issues in the MSCI Europe index that are above their 100-day moving average has fallen since January:

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Net advances appear to be weakening:

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Fewer constituents are outperforming the MSCI World:

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And finally, by most valuation metrics, the majority of companies continue to trade at elevated levels:

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