EM Stocks Washout Update by Bryce Coward, CFA, Gavekal Capital Blog
EM stocks as measured by the MSCI EM Index are now down 23% from their April high and 26% from their August 2014 high. The last real emotional low we saw in EM stocks was back in 2011 when the MSCI EM Index fell 29% in four and a half months into September of that year. We are taking our cues for signs of a similar emotional low from that episode and by that metric, we may yet see further selling pressure.
In 2011 the percent of stocks above their 200-day moving average fell into the low single digits. We are at 15% today.
Seth Klarman's Baupost is one of the largest hedge funds in the world, and it utilizes a long-only, value-focused investment process. However, some well-known names have suggested that value investing is dead, so where does that leave Baupost and other highly reputable value investors? Klarman had some insight in his year-end letter for 2021. Q4 Read More
In 2011 the percent of stocks saw their 50-day moving average above their 200-day moving average dropped below 10%. We are at 30% today.
Today the average stock’s loss from their 200-day high was 31% versus almost 40% back in 2011.
50% of stocks are down by at least 30% today compared to nearly 70% in the fall of 2011.
New lows reached a pinnacle of 50% in 2011 and we are only at 29% today.