Gavekal Capital: Health Care Is Strong But Is Feeling Lonely

Tuesday, September 30, 2014

Health Care Is Strong But Is Feeling Lonely

The health care sector has undeniably been the stock market leader over the past four years. Looking at the Developed Markets (DM) and Emerging Markets (EM) together, the health care sector has returned 122.4% over the past four years. Besting, the second place consumer discretionary sector by over 22%. If we separate EM and DM, health care remains on the top of leaderboard for DM and near the top for EM. DM health care sector is up 129.4% over the past four years and EM health care is up over 89%, behind the consumer discretionary sector for best performing sector.

Emerging and Developed Markets Combined Performance

Developed Markets Performance

Emerging Markets Performance

Year-to-date, health care stocks have remained strong returning 12.7% in DM (versus just 2% return for the average stock). However, the health care sector is starting to be the last leg for this bull market to stand on, especially in the Developed Markets. Only 48% of stocks in the MSCI World index are trading above its 200-day moving average (MA). We say only because this is the fewest number trading above its 200-day MA since November 2012. In Europe, only 24% of stocks are trading above its 200-day MA. However, if we look at just European health care stocks 68% of stocks are trading above its 200-day MA. Overall, 74% of all MSCI World Index health stocks are trading above its 200-day MA. No other sector in the MSCI World Index has more than 53% trading above its 200-day MA and six sectors are below 50%. In Europe, no other sector has more than 38% trading above its 200-day MA and there are three sectors, Materials, Energy and Industrials where less than 20% of the stocks are trading above its 200-day MA.

MSCI World

MSCI Europe

MSCI North America

MSCI Pacific

About Gavekal Capital

Gavekal Capital is a US registered investment advisory firm that manages the Gavekal Knowledge Leaders Strategy. Knowledge Leaders are a group of the world’s leading innovators with deep reservoirs of intangible capital. These companies often possess competitive advantages such as strong brand, proprietary knowledge or a unique distribution mechanism. Knowledge Leaders are largely service-based and advanced manufacturing businesses, often operating globally. Gavekal Capital seeks to identify the world’s leading knowledge companies through a proprietary process that analyzes corporate knowledge investments.
We offer the Gavekal Knowledge Leaders Strategy in multiple products for global investors. For more information about our product offerings please visit http://www.gavekalcapital.com.
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Disclosure

The information presented here is for informational purposes only, and this document is not to be construed as an offer to sell, or the solicitation of an offer to buy, securities. Some investments are not suitable for all investors, and there can be no assurance that any investment strategy will be successful. An investor cannot invest directly in an index. Hyperlinks may be included in this message that provide direct access to other internet resources, including web sites. While we believe these links are to reliable sources, Gavekal has no control over the accuracy or content of information contained on these sites. Although we make every effort to ensure such links are accurate, up to date and relevant, we have no control over pages maintained by external providers. The views expressed by these external providers on their own web pages or on external sites they link to are not necessarily those of Gavekal.
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