(Bloomberg) -- The global selloff in technology shares is helping derail one of this year’s top-performing stock trades.
After handing investors their biggest returns in eight years in 2017, signs are mounting that the MSCI Emerging Market Index is starting to reverse course. The gauge is down about 5 percent since reaching a six-year high in late November and is testing a break below its 100-day moving average for the first time since January.
While a pickup in worldwide growth is still buoying optimism about the developing economies that underpin the index, traders are playing safe and locking in profits as a selloff in U.S. technology stocks spreads jitters across global markets. Tech companies, mainly from Asia, make up 28 percent of the emerging-markets gauge.
“If global IT comes down, EM struggles,” said Maarten-Jan Bakkum, a senior strategist at NN Investment Partners in the Hague, who reduced his overweight on emerging-market stocks last week for the first time this year. “Investors want to protect performance before the end of the year.”
