Knowledge Leaders are Holding Their Own in the Selloff

August 24, 2015
By Bryce Coward, CFA in Knowledge Leaders, Markets

We’ve been highlighting the carnage in both the developed markets and emerging markets recently, but it’s important to point that not all stocks are suffering as badly as the headline indexes. Our group of global Knowledge Leaders is faring considerably better than the whole, especially our DM Knowledge Leaders.

Our DM Knowledge Leaders index is currently up 1.4% on the year while the headline MSCI World Index is down 3.4% (chart 1). Meanwhile, the selloff has  been much less broad based among the Knowledge Leaders. More Knowledge Leaders (blue line) are above their 200-day moving averages than the MSCI World Index (red line) (chart 2) and more Knowledge Leaders still have positive momentum (chart 3).

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Our EM Knowledge Leaders Index is still outperforming its benchmark, but the selling pressure has over the last few days permeated even to this high quality group of companies and as such our EM Knowledge Leaders is outperforming the MSCI EM Index by less than 2% so far this year (chart 3). Technical trends remain slightly more favorable for our EM Knowledge Leaders than the broad EM stock index, but the divergence is obviously much less pronounced than in the developed markets. This indicates indiscriminate selling in the emerging markets.

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