Asia Has Provided Much Needed Diversification During the Brexit Shakeout
by Eric Bush, Gavekal Capital
As stocks have tumbled over the past several sessions equity investors have greatly benefited if they have been overweight developed market Asia and more specifically if they have been overweight DM Asia consumer staples.
Exactly half of the stocks in the GKCI DM Index have outperformed the MSCI World Index over the past five days but that aggregation obfuscatesĀ the regional disparity that has occurred. 56% of DM Americas stocks have outperformed while just 13% of of DM EMEA stocks have outperformed. As stated earlier, DM Asia has been by far the best region with 77% of stocks outperforming the MSCI World Index. Investors would have incrementally increased their odds of outperforming if they had just focused solely onĀ Japanese equities in the DM Asia region. 79% of Japanese stocks have outperformed the MSCI World Index.
If we drill down by sector into the DM Asia region, we find that each of the 10 sectors has had at least a majority of the stocks outperform the MSCI World Index. Two sectors that particularly stand out are consumer staples and health care. 97% of DM Asia consumer staple stocks have outperformed over the past five days and 93% of Ā DM Asia health care stocks have outperformed as well.
Copyright Ā© Gavekal Capital
