Digging Underneath The World Equity Market SurfaceOctober 07, 2014
While many of the headline indices, such as the S&P 500, are still within sniffing distance of all-time highs, there is turmoil underneath the surface of the world equity markets. The MSCI World Index is higher by about 9% year-over-year. However, the average stock is only 6% higher and the median stock is only 4% higher. Both of these internal statistics are at its lowest level since late 2012.
Looking at just the MSCI World Index hides the recent weakness in Europe and Asia due to the relative strength in North America. The average stock in North America has gained 13% year-over-year and the median stock has gained 12%. Meanwhile, the average and median stock in Europe is actually down 2% over the past year. The average stock in Asia is flat over the past year and the median stock is down -3%
Only 27% of stocks in the MSCI Pacific index have outperformed the MSCI World over the past year. This statistic stands at 31% for MSCI Europe. Meanwhile, 58% of MSCI North America stocks have outperformed the MSCI World Index over the past year. Overall, however, only 42% of all MSCI World Stocks have outperformed. This is basically the lowest level since April 2008.
An eye-opening 61% of all stocks in the MSCI World Index are at least 10% off its 200-day high and 24% of all stocks are at least 20% off its 200-day high. This latter statistic is also at its lowest level since late 2012.
Once again, when we look at this data regionally Europe and Asia are hit the hardest. And in this case, Europe is especially weak. 42% of all MSCI Europe stocks are off its 200-day high. This compares to only 14% in MSCI North America and 25% in MSCI Pacific.
Finally, while it may feel like volatility in the equity markets have increased. The truth of the matter is daily volatility levels are still practically at seven-year lows. And in Asia, daily volatility is currently at some of the lowest levels in 20 years.