Vermilion Int'l Compass: Global Equity Strategy
MSCI ACWI Coiling Under All-Time HighsWe remain near-term bullish since our 4/22/25 Compass, we continue to believe the SPX and MSCI ACWI (ACWI-US) likely bottomed at 4800-4820 and $101-$102 (May 13, 2025 Int'l Macro Vision), and our intermediate-term outlook remains bullish as well (5/14/25 Compass). We will maintain our bullish view as long as market dynamics remain healthy and the SPX and ACWI-US are above 5500 and $115. We just discussed in last week's Int'l Compass (May 22, 2025) how we would be buyers on pullbacks to these levels, but that it is no guarantee that they get revisited. We also said we would also be buyers at 5700-5785 on SPX and $120-$121 on ACWI-US, which are shorter-term supports. SPX made a low of 5767 and ACWI-US made a low of $121.25 last Friday. We expect 5700-5785 on SPX and $120-$121 on ACWI-US to hold as support, but considering the historic run up as they approach all-time highs, we would not be surprised to see another week or two of consolidation.
Remain Overweight Germany/Europe and the U.S. We remain overweight Germany (DAX), broader Europe (EURO STOXX 50), and the U.S. (S&P 500). With that said, RS on the EURO STOXX 50 appears to be stalling, and we are monitoring broader-Europe for a downgrade to market weight. This has come as both European (EUFN-US) and U.S. (XLF) Financial stocks have stalled in terms of RS. Despite this RS deterioration, several European countries are still worthy of an overweight in addition to Germany, including Greece (ATHEX Composite), Spain (IBEX 35), and Ireland (ISEQ All-Share).
Japan Testing Resistance, Korea Breaking Out. Japan's TOPIX remains in a bullish trend, and is testing significant 1+ year resistance at 2820. We expect an eventual breakout, and we continue to see many attractive individual names within Japan. Korea's KOSPI displays a 10-month base breakout and RS is bottoming -- add exposure. Korean Financials are leading the way (alongside Industrials), and we highlight four of our favorite names: Shinhan Financial (055550-KR), Hana Financial (086790-KR), Woori Financial (316140-KR), and KB Financial (105560-KR)... see pages 4-5.
Emerging Markets. MSCI Emerging Markets (EEM-US) remains near $46.50-$47 resistance, and despite the recent 2-week consolidation, the short-term trend remains bullish. In Hong Kong/China, the Hang Seng could be making a lower high relative to March, while the Shanghai Composite remains below 3-year resistance at 3425.
Actionable Themes: Industrials, Services, Consumer Discretionary, Technology, and Utilities. In addition to Korean Financials, we highlight attractive names within these Sectors
Bharat Heavy Electricals is an integrated power plant equipment manufacturer in India engaged in the design, engineering, manufacture, construction, testing, commissioning and servicing of a wide range of products and services for the core sectors of the economy, viz. Power, Transmission, Industry, Transportation (Railway), Renewable Energy, Oil & Gas and Defense with over 180 products offerings to meet the needs of these sectors. Co. operates through Power and Industry segments.
Brambles is a supply-chain logistics company operating primarily through the CHEP and IFCO brands. Co. has three segments: Pallets segment, which primarily serves the consumer goods, fresh produce and beverage industries, and sub-divided into three regions: Americas, Europe, Middle East and Africa, and Asia-Pacific; Reusable Plastic or Produce Crates segment, which serves the fresh produce and food industry and comprising the IFCO RPC pooling business worldwide and the CHEP RPC pooling businesses in Australia, New Zealand and South Africa; and Containers segment, which comprises four business units: Automotive, Intermediate Bulk Containers, Oil and Gas, and Aerospace.
Energizer Holdings is a manufacturer, marketer and distributor of household and specialty batteries, portable lights, and automotive appearance, performance, refrigerants and freshener products. The company provides batteries using various technologies including lithium, alkaline, carbon zinc, nickel metal hydride, zinc air, and silver oxide. The company manufactures, distributes and markets lighting products including headlights, lanterns, children's lights and area lights. The company also provides auto care products in the appearance and fragrance categories including protectants, wipes, tire and wheel care products, glass cleaners, leather care products, air fresheners and washes.
Kawasaki Heavy Industries is a manufacturer of transport equipment and industrial equipment. Co. is engaged in the manufacture and sale of ships, jet engines, turbines, generating machinery, hydraulic machinery, and industrial robots. Co. also offers railway vehicles, snow removing equipment, aircrafts, industrial machinery, boilers, environmental equipment, steel structures, crushing machines, motorcycles, all-terrain vehicles (ATV), utility vehicles, personal watercrafts, and general-purpose gasoline engines, as well as precision machinery such as hydraulic equipment and industrial robots. In addition, Co. is also involved in the agency business of sale and order of its products.
Solar Industries India Limited is an explosives manufacturing company. The Company manufactures, supplies and exports industrial explosives and initiating systems. It manufactures various explosives products, such as Slurry and emulsion base explosives, bulk explosives, detonators, pentaerythritol tetranitrate (PETN) and accessories. The Company's products include Large Dia slurry Explosives, Small Dia Emulsion, Small Dia Slurry Explosives, Solar Detonators, Supreme Detonators, Supreme Electric Detonators, Economic Sod, Eco Det, Cord Relay, Cast Booster and Detonating Fuse. Its products are used across mining and infrastructure sectors. It also offers high melting explosive (HMX) and HMX Compounded products to the defense sector. The Company has 25 manufacturing plants eight states in India and three in overseas locations. The Company offers its products to 42 countries across the globe. The Company has manufacturing facilities at Zambia, Nigeria and Turkey.
Yokogawa Electric is mainly engaged in the manufacture and sale of measurement and control equipment. Co. operates in three business segments. The Industrial Automation and Control segment manufactures and sells production control systems, flow monitors, pressure and differential pressure transmitters. The Test and Measurement segment manufactures and sells waveform measuring instruments, confocal scanners, signal generators and optical communication-related measuring instruments. The Aviation and Other businesses segment is involved in the manufacture and sale of aircraft instrument; marine navigation systems, hydrological and meteorological equipment; and the real estate-related business.
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.
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