Gavekal Capital: Appearances Can Be Deceiving

Wednesday, January 21, 2015

Appearances Can Be Deceiving

As we noted last week (here), emerging markets' equities are off to a better start so far this year, falling just 0.78% versus the 1.34% decline in their developed market peers. A quick look at the winners thus far:

By Country

By Sector

Top 10 Companies Overall

Top 10 EM Asia

Top 10 EM EMEA

Top 10 EM Latin America

And now, the point-and-figure charts for the leader in each region:

A quick glance at the price performance year to date would give the impression that these companies are off to an amazing (double-digit) start. When we take a moment to look at performance relative to the MSCI All Country World Index benchmark, we find that, while they have certainly rallied in the first few weeks of 2015, they are all locked into multi-year downtrends and appear to be (re-)testing resistance. Whether or not the positive start to the year can continue depends largely on the ability of each of these stocks to overcome that formidable hurdle.

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.
Blogs are posted by our investment team. Find out more about us at here. Read more about our strategy at www.gavekalcapital.com.

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.
The information listed on this blog is for example purposes only and should not be construed as the investment Advisor's opinion or investment outlook. As of the most recent quarter end, the named companies may have been held by the investment Advisor. Please review the most recent disclosures. For full information including additional policies and full disclosures on the Advisor, please visit our website gavekalcapital.com.