Report
Dave Nicoski ...
  • Ross LaDuke
EUR 47.72 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Battleground Spot For Global Equities

Last week we highlighted what appeared to be rising wedge breakdowns in the MSCI ACWI, ACWI ex-US, EM, and EAFE indexes, and suggested some consolidation made sense as we get a feel for how the process of re-opening the economy is going. It ended up being a very brief consolidation period and all horizontal support levels held strong. With all the aforementioned indexes breaking above the resistance levels that we highlighted last week, it tells us momentum is in favor of the bulls. The risk of a pullback remains very real, however at this point the weight of the evidence suggests a meaningful pullback is not imminent.

· MSCI ACWI (ACWI-US). Short-term bullish trends are colliding with a long-term resistance level at $70. This is an important battleground spot for global equities, however if ACWI-US is above $67.88 support we would give the edge to the bulls... see chart below.

· Resistance Turned Support. Now that the MSCI ACWI, ACWI ex-US, EM, and EAFE indexes (priced in USD) are above their respective short-term resistance levels, those same resistance levels are now support to watch moving forward. It is hard to be too bearish as long as these indexes are above support. If equities are going to pull back, these highlighted support levels will need to be violated first... see below and page 2.

· Index Overviews. Short-term bullish trends are battling with major long-term resistance zones, and the bulls are attempting a breakthrough. Europe's STOXX 600 is already overtaking major resistance while Europe's EURO STOXX 50, Japan's TOPIX, and Hong Kong's Hang Seng are still not decisively above their respective multi-year resistance zones. The MSCI ACWI ex-US, EAFE, and EM indexes (priced in local currency) are similarly attempting a breakthrough above their respective long-term resistance areas... see pages 3-4.

· Health Care and Consumer Staples in the US and Europe. The Health Care Sector displays early signs of RS deterioration in Europe and the US, while Consumer Staples' RS has been deteriorating for over a month. If this rotation away from Health Care and Staples continues (i.e., a change in leadership), it would be consistent with major historical bottoms... see page 5.

· Actionable Themes. Consumer Staples, Health Care, and Technology remain leadership in the Asia/Pacific region -- remain overweight/add exposure. We are also continuing to expand our recommendations to include bottom-up ideas within several other Sectors as the market goes through a bottoming process... see pages 6-8.
Underlyings
A2 Milk Company Ltd.

A2 Milk is principally engaged in the commercialization of a2 Milk™ related products as supported by the ownership of intellectual property that enables the identification of cattle for the production of a2 Milk™. Through its associated companies, Co. is also engaged in the distribution and marketing of a2 Milk™ in Australia and Japan and commercialize the sales and licensing rights for the supply, distribution and marketing of a2 Milk™ in the U.S. Co. products are also sold under the Jalna and Fresha Valley brand names. Co. operates predominantly in New Zealand and Australia.

Al Meera Consumer Goods Co.

All About

All About is mainly engaged in the provision of information services through internet website under the name "All About." Co. operates in four business segments. Advertisement segment is engaged in the distribution of advertisements, including traffic advertisements, impression advertisements, editorial advertisements and advertisements for sponsor sites. Style Store segment sells various kind of products. Profile segment is engaged in the provision of specialist information and advice. Financial Service segment offers securities, life insurance and non-life insurance services to individual investors and corporations.

Becle Sab De Cv

China Education Group Holdings Limited

China Education Group Holdings Ltd is an investment holding company principally engaged in the provision of private higher education services. The Company operates its business through three segments: the Higher Education segment, the Vocational Education segment, and the Global Education segment. The Company operates higher education and vocational education institutions in the People's Republic of China (the PRC) and provides education services in Australia and the United Kingdom (UK).

China MeiDong Auto Holdings Ltd.

China Meidong Auto Holdings Ltd. China MeiDong Auto Holdings Limited is a China-based investment holding company principally engaged in the sales of passenger vehicles. Its principal business include the automobile dealership business authorized by the respective automobile manufacturers of particular brands, the sales of new passenger cars and spare parts, the provision of after-sales services and survey services. The Company is also involved in the trading of used vehicles through its subsidiaries. The automobile brands operated by the Company mainly include Bavarian Motor Works (BMW), Lexus, Toyota and Hyundai.

China Yuhua Education Corp. Ltd.

CHINA YUHUA EDUCATION CORPORATION LIMITED is an investment holding company. The Company, along with its subsidiaries, is principally engaged in the provision of private formal education from kindergarten to university non-vocational education services in Henan Province of People's Republic of China. The Company operates in three segments: Kindergartens segment, Grade One to Grade 12 (Grade 1-12) segment and University segment. Its subsidiaries include China YuHua Education Investment Limited, China HongKong Yuhua Education Limited, Xizang Yuanpei Information Technology Management Company Limited and Henan Hantang Education Management Company Limited, among others.

Chongqing Brewery Co.Ltd Class A

Chongqing Brewery is engaged in the production and sale of beer. Through its subsidiaries, Co. is also engaged in the manufacture and sale of biochemical medicine, tablets and capsules and other pharmaceutical products; the provision of food, beverage and bar services; and the sale of commodity which including subsidiary food, beverage and liquor. Co.'s products include Sancheng beer, Chongqing beer, Daliangshan beer, Guoren beer and Jiuhuashan beer. Co.'s business is mainly operated in Chongqing, Zhejiang Province, Sichuan Province, Hunan Province and Anhui Province.

Chongqing Fuling Zhacai Group Co. Ltd. Class A

Chongqing Fuling Zhacai Group Co.,Ltd. is principally engaged in the research, production and distribution of pickled mustard tubers, pickled mustard tuber sauce and other appetizers. The Company primarily provides pickled mustard tubers, pickles, radish products, chili products and pickled mustard tuber sauce, among others, under the brand named Wu Jiang. The Company distributes its products in domestic and overseas markets.

Digital Arts Inc.

Digital Arts is an information technology related company mainly engaged in the development and sale of Internet filtering software. Co. provides Web filtering software, e-Mail filtering software, file security services, Internet access status research services, communication server systems and others. Co.'s products are used in private and government organizations, schools and homes. Co. also provides support services and software version up for its products. In addition, Co. provides Web filtering software for mobile terminal, game devices and televisions. Co.'s principal product names include "i-FILTER," "m-FILTER," "D-SPA (DigitalArts Secure Proxy Appliance)" and "Final Code."

Dom Development SA

Dom Development is engaged in the construction and sale of residential real estate in Poland.

E-MART Inc.

E-mart is engaged in the hypermarket business. Co. engages in the provision of basic necessities of life, food services, and food materials wholesale as well as operation of discount stores in Shanghai, China. Co. also operates resorts with golf courses. Co. operates over 140 stores across the Republic of Korea (South Korea) as of Dec. 2012.

GMO Internet Inc.

GMO Internet is mainly engaged in the provision of Internet services. Along with its subsidiaries, Co. is engaged in the provision of services including domain registration, Web hosting, SaaS base services for online stores, a marketplace operation, EC support, Website construction, Internet security, credit card settlement, consumer Internet provider, online advertising, advertising space on Co.'s own media properties, Search Engine Optimization, and Internet research. Co. is also engaged in the provision of online securities and foreign exchange margin trading businesses, and venture capital business, and the development and operation of games for smartphone as well as online games.

Hengan International Group Co. Ltd.

Hengan International Group Co. is an investment holding company. Through its subsidiaries, Co. is engaged in the manufacturing, distribution and sale of personal hygiene products including sanitary napkins products, disposable diapers products and tissue papers products and food and snack products in the People's Republic of China, Hong Kong and certain overseas markets.

iShares MSCI ACWI ex US ETF

iShares MSCI Emerging Markets ETF

iShares Trust MSCI EAFE Index Fund

Japan Elevator Service Holdings

JAPAN ELEVATOR SERVICE HOLDINGS CO.,LTD. is a Japan-based company mainly engaged in the provision of the maintenance and inspection service for elevators and escalators, as well as the renewal service for elevators. The Company operates three kind of businesses. The maintenance and inspection business is involved in the provision of maintenance, inspection, replace and repair services for the engine performance and the operation safety of elevators and escalators. The renewal business is involved in the provision of a full range of main components' replacing service, the removal service of products already in the field, as well as the new setting service for elevators which are installed 20 years ago. The others business is involved in the sale of parts for elevator's maintenance.

Jiangsu Hengrui Medicine Co. Ltd. Class A

Jiangsu Hengrui Medicine is engaged in the development, manufacture and distribution of raw chemical pharmaceuticals, tablets, capsules, powder injections, lyophilized powder for injections, sterile poured-in powder injections, large & small volume parenteral solutions, bulk drugs, western medicines, eye-drops, medicine packaged materials and raw medicines. Through its subsidiaries, Co. is also engaged in the development, manufacture and wholesale of spray solutions, chinese medicines and raw chemicals and research and development of producing new medicines.

Juewei Food Co. Ltd. Class A

Juewei Food Co., Ltd is a China-based company principally engaged in the research, development, production and sales of marinating snack foods. The Company operates through three main segments. The Marinating Snack Foods segment is mainly engaged in the production and sales of marinating foods. The products can be divided into two categories, including marinating meat snack foods which are made from raw materials, such as duck meat, chicken and pork, as well as marinating vegan snack foods which are made from green soy beans, carrots and peanuts. The Franchisee Management segment is mainly engaged in the enterprise management and the provision of consulting services. The Others segment is primarily engaged in the container cleaning and provision of product packages, among others.

Kushim

iStudy is engaged in the creation and sale of software products. Co. has three main businesses. iLearning segment creates and sells educational software "iStudy "and provide a learning environment online. "iStudy" covers contents for database, operating systems, network application and language studies and is designed for IT engineers seeking information technology (IT)-related qualification. Learning segment provides engineering training courses and training support services primarily for IBM Japan, Ltd and Oracle Corp. Co. provides temporaty staffing services.

Kweichow Moutai Co. Ltd. Class A

Kweichow Moutai is engaged in the manufacture and sale of "Guizhou Moutai" series distilled spirits; manufacture and sale of beverages, food and packaging materials; development of anti-counterfeiting technologies; and research and development of relevant IT products. Through its subsidiaries, Co. is also engaged in the wholesale of agricultural vice-local products, building materials, decoration materials, metal materials, machineries, electronic products, telecommunication products, hardware, rubber products, general merchandises and furniture. Co.'s products include millesimes liquor, gift liquor, common liquor and other liquor series.

Lasertec Corp.

Lasertec is mainly engaged in the development, manufacture, and sale of semiconductor-related products and other products, as well as the provision of services for its products. Co.'s principal products include systems related to defect inspection/measurement of mask, mask blanks and wafer; systems related to defect inspection of large size photomask and PV cell conversion efficiency distribution measurement system; and systems related to microscope based on confocal optics. Along with its subsidiaries, Co. offers its products and services in Japan as well as in North America, Europe, and Asia regions.

Liaoning Wellhope Agri-Tech (A)

Liaoning Wellhope Agri-Tech Joint Stock Co Ltd. Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd. is a China-based company mainly engaged in the processing, production and sales of feed products. The Company's primary feed products include compound premixed feed, concentrated feed and compound feed for pigs, poultry, ruminants, aquatics and fur animals. The Company is also engaged in the trading of raw materials, slaughter and processing, as well as other related businesses through its subsidiaries. The Company mainly operates its businesses in the Mainland of China.

Magazine Luiza S.A.

Magazine Luiza is primarily engaged in the retail sale of consumer goods (mainly home appliances, personal electronics and furniture), through physical and virtual stores or through e-commerce, with headquarters in the city of Franca, state of Sao Paulo, Brazil. Its parent and holding company is LTD Administracao e Participacao S.A. As of Dec 31 2012, Co. and its subsidiaries owned 743 stores (636 of which were conventional stores and 106 were virtual stores) and eight distribution centers, located in the South, Southeast, Mid-west and Northeast regions of Brazil.

MEDIATEK INC.

Mediatek is engaged in the research, development, manufacture and sales of multi-media integrated circuit ("IC"), IC for computer peripherals, IC for advanced consumer electronics, IC for other special applications and decoders of optical storage; software application design, testing, maintenance and technical consultation services for IC; the import and export of products related to IC. Co.'s product items include optical storage chipset; CD-ROM chipset and single chip, DVD-ROM chipset and single chip, CD-R/RW chipset, combi chipset; and advanced digital consumer chipset DVD-Player chipset (RF chip, servo controller chip and highly integrated chip).

Muyuan Foods Co. Ltd. Class A

Muyuan Foods Co.,Ltd. is a China-based company principally engaged in the breeding and distribution of pigs. The Company's main products consist of piglets, boars and commodity pigs. The Company operates its business mainly through feedstuff processing, hog breeding, boar breeding and commodity pig feeding. The Company operates its business in domestic market.

NanJi E-Commerce Co. LTD. Class A

Jiangsu Xinmin Textile Science & Technology and its subsidiaries are principally engaged in the weaving, printing and dyeing of chemical fibers and various silk fabrics; development, manufacture and sales of silk garments and textile additives; and import and export trading of textile. Co.'s principal products include differentiated chemical fiber filaments, pure silk fabrics, synthetic silk fabrics and intertwined textile. The products are predominantly sold in the People's Republic of China as well as exported to Europe, United States and Japan.

Nanjing King-friend Biochemical Pharmaceutical Co. Ltd. Class A

Nanjing King-Friend Biochemical Pharmaceutical Co., Ltd. is a China-based company principally engaged in the research and development, production and sales of heparin-related products. The Company's main products include standard heparin raw materials, low molecular weight heparin raw materials and their preparations, such as heparin sodium raw materials, heparin sodium, enoxaparin sodium injection, dalteparin sodium injection and Naqu Heparin Calcium Injection. The Company mainly exports its products to the United States and European countries.

NAVER Corp.

Naver is engaged in the Internet industry. Co. operates the search portal, Naver (www.naver.com) the online game portal, Hangame (www.hangame.com) the children's portal, Jr.Naver (jr.naver.com) and its first online donation portal, Happybean (happybean.naver.com). Co. along with its search portal, Naver, is engaged in the provision of Internet services to users, advertisers, publishers, and developers. Co. provides its owned and operated online properties and services to Internet users.

Nikkei225 Bull 2x ETF

Nuveen Pennsylvania Municipal Value Fund

OBIC Co. Ltd.

OBIC is mainly engaged in the provision of system integration, system support, office automation and other computer related services. Along with its affiliates, Co. operates in three business segments. System Integration Services segment develops software for customers based on an analysis of customer requirements for the system. System Support Services segment provides system operation support and maintenance, and hardware maintenance for customers that use Co.'s products. Office Automation Services segment is engaged in the sale of PC-peripherals, telecommunication equipment and related supplies, as well as office furniture. Co. also provides packaged software of financial accounting.

Pan Pacific International Holdings Corporation

Don Quijote Holdings is a holding company mainly engaged in the operation of discount stores. The Retail segment is engaged in the operation discount stores offering electrical appliances, daily commodities, foods, apparel, sporting goods and leisure equipment under the name of "Don Quijote" and "MEGA Don Quijote." It also operates general merchandise stores under the name of "Nagasakiya" and do-it-yourself stores under the name of "Doit." It operates 368 stores as of June 30 2017. The Tenant Leasing segment is engaged in the leasing and management of commercial facilities.

Rasa

Rasa is a trading company engaged in the various businesses including resources, metals, industrial, construction, chemical and real estate. Co. is engaged in the import of natural resources such as zircon sand, as well as the export of a variety of products made in Japan including ferro-nickel and mini crawler crane; the sale of various machineries including pumps, valves, automatic pipe cutter; the design, operatio and sale of "RASA system" slag granuralation plant; the construction and maintenance work of plants related to oil and gas; the production and sale of plastics and chemicals; and the lease of real estate properties.

Rentokil Initial plc

Rentokil Initial is a holding company. Through its subsidiaries, Co. provides services that include pest control, hygiene and workwear, as well as a range of other services including plants, medical services, property care and hygiene. Co.'s businesses include: Pest Control, which consists of Rentokil Pest Control, a commercial pest control company; Hygiene, which consists of Initial Hygiene, a hygiene services company; Workwear, which consists of Initial Workwear, a provider of workwear services across the four main continental European markets of France, Germany, Belgium and the Netherlands; and Other, which consists of Ambius, an interior landscaping business.

Royal Vopak NV

Royal Vopak is a holding company. Via its subsidiaries, Co. acts as a tank storage provider for the oil and chemical industry. Co. operates a network of terminals located at locations along trade routes. Co. also provides a range of additional services, from loading and unloading a range of transport modalities to heating, cooling, blending and customs formalities. The customers Co. serves range from global to local clients and include national and global producers, governments, distributors and traders of liquid and gaseous bulk products. Co.'s customers are active in the production, trading and marketing of oil products, chemicals, gases, biofuels, edible oils and liquefied natural gas.

Seria Co. Ltd.

Seria is a discount retailer of general merchandise that sells products at a single price of 100 yen. Co. is engaged in the retail of consumer products through stores, as well as the wholesale of products to franchisees, clients and overseas agents. Co. offers daily miscellaneous goods, such as kitchenware, eating utensils, laundry products, cosmetics, accessories, stationery, toys, storage goods, electrical appliances, pet goods, interior goods and seasonal products; and food products including instant foods, seasonings, canned food, noodles, rice, confectionery, drinks, bakery products and sweets. As of Mar 31 2017 Co. maintains total 1,369 stores including 55 franchised stores.

Shanghai M&G Stationery Inc.

SHANGHAI M&G STATIONERY INC. is a China-based company mainly engaged in the research and development, design, manufacture and sales of writing instruments, student stationery and office stationery. The Company is also involved in the development of fine stationery experience centers, the provision of one-stop office service platforms, as well as the Internet and e-commerce platforms. The Company's writing instruments mainly include gel pens, ball-point pens, mechanical pencils, water-based pens, functional pens and brushes.

Stars Group Inc

Stars Group is a provider of technology-based products and services in the gaming industry. Co. has two reportable segments: Business-to-Consumer (B2C) and Business-to-Business (B2B). B2C consists of Rational Group, while B2B consists of Co.'s B2B interactive gaming solutions, land-based gaming solutions, and lottery solutions. Rational Group owns and operates gaming and related businesses and brands including, among others, PokerStars. Co.'s B2B operation is engaged in the design, development, manufacturing, distribution, sale and service of technology-based gaming solutions for the regulated gaming industry worldwide, primarily to land-based and online gaming operators.

Sun Art Retail Group Limited

Sun Art Retail Group is an investment holding company, engaged in the operation of hypermarkets in the People's Republic of China (PRC), under two banners of Auchan and RT-Mart. As of Dec 31 2014, Co. had a total of 372 hypermarket complexes in China, with a total gross floor area of approximately 10,277,525 sq. m.

Suzhou Zelgen Biopharmaceuticals Co., Ltd.

Tangrenshen Group (A)

TANGRENSHEN GROUP CO., LTD is a China-based company principally engaged in feed, meat, breeding, boar and acquisition investment businesses. The Company provides feed products for pigs, poultry and fish under the brand of Luotuo. The Company breeds and sells pigs under the brand of Meishen. The Company is also involved in the research and development, processing and sale of meat products under the brand of Tangrenshen. The Company operates its businesses mainly in domestic market.

Top Glove Corporation Bhd.

Top Glove is a holding company. Co. is engaged in the provision of management services. Through its subsidiaries, Co. is engaged in the manufacturing and trading of gloves, the provision of management services, property investment, investment holding, producing and selling concentrate latex, as well as plantation of rubber trees. Through its associate, Sonic Clean Pte. Ltd., Co. provides aqueous cleaning services, consumable cleaning and subassembly work in clean room environment and investment holding. Co. and its subsidiaries have five reportable operating segments: Malaysia, Thailand, The People's Republic of China, The British Virgin Islands, and Others.

Topchoice Medical Corp. Class A

Top choice Medical Investment Co.,Inc. is a China-based company engaged in the provision of healthcare service. The Company mainly operates through the segment of oral healthcare service. The Company operates its businesses primarily in domestic market, with Zhejiang province as its major market. The Company operates various oral healthcare hospitals, including Hangzhou Dental Hospital, Hangzhou Chengxi Dental Hospital and Ningbo Dental Hospital. The Company is also engaged in the in vitro fertilization (IVF) service business.

Vats Liquor Chain Store Management (A)

Vats Liquor Chain Store Management Joint Stock Co Ltd. Vats Liquor Chain Store Management Joint Stock Co., Ltd. is a China-based company principally involved in liquor sales. It primarily sells white spirits, wine and rice wine in the way of chain stores, VATS liquor, retail outlets, Key Account (KA) stores, group purchases, e-commerce and terminal suppliers. The Company conducts its businesses in domestic and overseas markets.

Yifeng Pharmacy Chain Co Ltd Class A

Yifeng Pharmacy Chain Co., Ltd. is a China-based company principally engaged in the chain retailing of pharmaceuticals, health products, medical equipment and health-related household convenience products. The Company mainly operates through retailing segment. The Company operates more than 1, 000 direct pharmaceutical chain stores mainly in six provinces (or municipalities), including Hunan, Hubei, Shanghai, Jiangsu, Zhejiang and Jiangxi. The retail products of the Company includes pharmaceuticals, medical equipment, health products, health food, personal care products and maternal and child products. The Company is also engaged in the wholesale business through its subsidiary, Hunan Yifeng Pharmaceutical Co., Ltd.

Zhongji Innolight Co. Ltd. Class A

ZHONGJI INNOLIGHT CO., LTD. is a China-based company mainly engaged in high-end optical communication transceiver module business and intelligent equipment manufacturing business. The Company is committed to the research, development, manufacturing and sales of high-end optical communication transceiver modules. The products mainly serve the fields of cloud computing data centers, data communications, 5G wireless networks and telecommunications transmission networks. The intelligent equipment manufacturing business includes the research and development, manufacturing, sales and after-sales service of motor stator winding manufacturing equipment. The products are mainly used in automotive motors, industrial motors, household appliances motors and other fields. The Company operates its businesses in both domestic and overseas markets.

Provider
Vermilion Research
Vermilion Research

Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.

Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.

Analysts
Dave Nicoski

Ross LaDuke

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