Vermilion Int'l Compass: Global Equity Strategy
MSCI EM in early stages of bottomingOur overall global outlook remains cautious and continued downward pressure on global equities remains our expectation. This belief is supported in part by the absence of bottoming price action for broad global indexes (MSCI ACWI, ACWI ex-U.S., and EAFE), which are still making lower highs and lower lows. However, one bright spot is EM (more on this below), which continues to give us hope that global equities can bottom out.
• Emerging Markets. We began highlighting the MSCI EM index as leadership on a relative basis back in November, so continued outperformance is nothing new. What is new is that the index now displays a positively developing price bottom as it inflects topside the downtrend. Remain overweight/add exposure... see chart below.
• Developed Markets. Europe (STOXX 600) and Japan (TOPIX, Nikkei) continue to struggle from both a price and RS perspective -- be selective. On the other hand, Hong Kong (Hang Seng) is one of the more attractive developed country indexes - and not just because of heavily-weighted Chinese constituents... see page 2.
• Actionable Sectors. Recent RS deterioration for defensive Sectors Utilities and Staples has been primarily a U.S.-centric phenomenon. However, throughout both emerging and developed markets (ex-U.S.) these Sectors remain leadership and attractive setups are widespread -- overweight/add exposure... see pages 3-13.
Aboitiz Power is a holding company. Through its subsidiaries and associated companies, Co. operates within two segments: power generation, which is engaged in the generation and supply of power to various customers under power supply contracts, ancillary service procurement agreements and for trading in wholesale electricity spot market; and power distribution, which is engaged in the distribution and sale of electricity to the end-users. Co. supplies electricity to franchise areas covering a total of 18 cities and municipalities in Central Luzon, Visayas and Mindanao. As of Dec 31 2011, Co. had a total of 740,833 customers.
Acea is engaged in services related to the energy services area, water services areas and areas of diversification (telecoms) and services. Co. operates prinicpally in the energy services area (electricity and urban heating) and in the water services area (fresh and waste water), supplying services mainly in the territory of Rome and its Province. In energy services, Co. maintains operations in the production, transmission and distribution of electricity. In water services, Co. is active in the abstraction, transport and distribution of fresh water of the Comune di Roma and several local authorities in the provinces of Rome and Rieti. Co. also maintains operations in telecommunications.
AES Gener SA is a Chile-based company engaged in the electricity generation. The Company supplies electric power to four national grids: the Central Interconnected System (SIC) and the Great North Interconnected System (SING) in Chile, the National Interconnected System (SIN) in Colombia, as well as the Argentinean Interconnected System (SADI) in Argentina. Its power generation facilities comprise run-of-river hydroelectric plants, diesel oil and natural gas-fired thermoelectric plants, coal-fired thermoelectric plants and cogeneration plants, among others. In addition, the Company develops electricity projects. The Company is indirectly controlled by AES Corp through its subsidiary Inversiones Cachagua Ltda.
BRF is a holding company. Through its subsidiaries, Co. is engaged in the production and sale of poultry, pork, beef cuts, and processed food products, pasta, sauce, mayonnaise, frozen vegetables and soybean by-products under several brands. Co.'s processed products include marinated, frozen, whole and cut Chester® rooster and turkey meats, specialty meats, frozen processed meats, frozen prepared entrees, portioned products and sliced products. Co. also sells margarine, sweet specialties, sandwiches, mayonnaise, and animal feed. Co. has an advanced distribution system and uses distribution centers to deliver its products to more than 120 countries.
Canadian Utilities is an ATCO Ltd. company. The Structures and Logistics Business Unit provides workforce housing, modular facilities, construction, site support services, and logistics and operations management. The Electricity Business Unit provides power generation, electricity distribution and transmission, and related infrastructure services. The Pipelines and Liquids Business Unit provides complementary products and services that enable them to deliver natural gas transmission and distribution services, energy storage, and industrial water solutions to customers. ATCOenergy provides retail, commercial and industrial electricity and natural gas service in Alberta.
Centrais Eletricas Brasileiras is engaged in controlling the Brazilian electric energy policy, which includes the planning, financing, coordination and supervision of construction, expansion and operation programs of electric generation, transmission, and distribution systems. Co. also operates as a sector planning entity, which coordinates interconnected electric systems, and provides corporate management and technical assistance. In addition, Co. is engaged in research and development of electricity, including the development of local manufacturing equipment and materials, research related to environmental protection in Brazil.
Chugoku Electric Power is engaged in the generation, transmission, and distribution of electric power mainly in the Chugoku region. Electric Power segment is engaged in the supply of electric power through hydroelectric, thermal, nuclear power and renewable energy. Comprehensive Energy Supply segment is engaged in the the sale of LNG and coal, the provision of heat supply services, the wholesale of electricity and the provision of power plant engineering and training services. Information and Telecommunications segment provides optical fiber communications for individual and corporate customers and ICT (information, communication and technology) services for corporate customers.
CLP Holdings is an investment holding company. Through its subsidiaries, Co. operates five geographical regions, Hong Kong, Mainland China, India, Southeast Asia and Taiwan, and Australia. In Hong Kong, Co. generates, distributes and provides electricity supply. In china, Co. produces power with a focus on clean and low-carbon energy, including nuclear and renewables. In India, Co. has a diversified generation portfolio comprising coal, gas and renewable energy. In Southeast Asia and Taiwan, Co. has interests in Taiwan's Ho-Ping Power Station and Lopburi solar project in Thailand. In Australia, Co.'s asset portfolio includes coal, gas and wind generation and gas storage facilities.
CC.P. All Public Co. is mainly engaged in the businesses of operati