Report
Dave Nicoski ...
  • Ross LaDuke
EUR 239.73 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Major Indexes Testing Resistance

Positive news flow surrounding COVID-19 is encouraging on many fronts, notably from a human and economic perspective (e.g., peaking infections/deaths in Italy & Spain, certain European governments making plans to ease lockdowns, and that US death projections were likely overestimated). Still, despite encouraging news and the relief rally in global equities, history tells us that this is a fairly standard bear market rally in terms of its magnitude, making us believe the global equity market is not yet out of the woods. To be clear, the bulls are still in control in the short-term, but we are watching for signs of a turn of the tide. There has been significant damage inflicted and that damage is going to take time to repair.

· MSCI ACWI ex-US (ACWX-US). In last week's Int'l Compass we noted the potential for support in the $35.10-35.75 range. ACWX-US held this range and made a low of $35.78 on Friday which, at the moment, has the potential to be a higher low which tells us the bulls are in control. For now, $35.10-35.75 remains key support to watch, and a break below this level would likely mean a visit to the March lows. Current resistance we are watching continues to be in the $38.50 to $39.80 zone... see chart below.

· Favor EM (MSCI EM) Over EAFE (MSCI EAFE). We continue to believe that EM is a better place to be than EAFE, supported by the EM vs. EAFE ratio building a bullish base and making higher lows. Over half of today's individual stock recommendations are domiciled in EM countries. Remain overweight China (MSCI China, Shanghai Comp.), which continues to be a big reason for EM's outperformance... see page 2.

· Index Overviews. Several major indexes are testing significant multi-year resistance zones. This includes Europe's STOXX 600 & EURO STOXX 50, Japan's TOPIX, and Hong Kong's Hang Seng... see page 3.

· Actionable Themes: Staples, Health Care, Technology, Additional Bottom-Up Ideas. Consumer Staples, Health Care, and Technology remain global leadership Sectors, and these areas continue to be our primary focus. 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 4-6.
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.

Abdullah Al Othaim Markets Co.

Abdullah Al Othaim Markets CompanySJSC Formerly known as Abdullah Al-Othaim Markets Company. Abdullah Al-Othaim Markets Company SJSC is a Saudi Arabia-based joint stock company engaged in the retail and wholesale trade of food stuff, in addition to constructing commercial malls and investing in their sales or leases. The Company undertakes wholesale trading in food supplies, fish, meat, cars and its spare parts, agricultural crops and livestock, and household equipment; constructing, managing, operating and maintaining of super markets, malls, and storage and cooling warehouses; cooked and non-cooked catering services; computer services, and operating and maintaining electrical and mechanical equipment. During the year 2011, the Company operated seven hypermarkets, 65 supermarkets, eight wholesale outlets and 26 corners.

Anhui Conch Cement Co., Ltd.

Banco Latinoamericano de Comercio Exterior S.A. Class E

Beijing Shunxin Agriculture Co. Ltd. Class A

Beijing Shunxin Agriculture is engaged in the production and sale of spirits; processing and sale of meat product; production and sale of fruits and vegetables juices; seed breeding; provision of agricultural technology services; breeding swine; sale of vegetables and fruits; processing agricultural by-product; logistics operation; marketing management; water and construction engineering; real estate development; cultivation and sale of high-grade flowers. Through its subsidiaries, Co. is also engaged in the provision of commercial information and flower warehouse services; and processing and making paper products.

BMO Asia USD Investment Grade Bond ETF

C. Uyemura & Co. Ltd.

C. Uyemura is engaged in the manufacture and sale of specialty plating and surface finishing chemicals, specialized finishing and plating equipment, chemical control systems, industrial commodity chemicals, and non-ferrous metals. Co.'s principal products are plating chemicals for aluminum magnetic disks and printed wiring boards ("PWBs"), industrial chemicals, non-ferrous metals, and plating machinery for aluminum magnetic disks and PWBs. Co. is also engaged in the provision of plastic plating services and PWB plating services; and the rental of office buildings and apartment houses.

C&S Paper Co. Ltd. Class A

C&S Paper Co.,Ltd is a China-based company principally engaged in the production, processing and sales of household paper products. The Company's main products include roll paper and non-roll paper tissue products. The Company owns brand names of C&S and Sun. The Company distributes its products in the domestic market.

China National Building Material Co., Ltd.

Foshan Haitian Flavouring & Food Co. Ltd. Class A

Foshan Haitian Flavouring and Food Company Ltd. is a China-based company, principally engaged in the manufacture and distribution of seasonings. The Company's products portfolio consists of soybean sauces, general sauces, oyster sauces, chicken essence seasonings, vinegar and others, with soybean sauces, general sauces and oyster sauces as its main products. Its general sauces are applied in barbecue sauces, hot pot sauces and others. Its oyster sauces are applied in cooking, salad dressings and others. The Company conducts its businesses mainly within domestic markets.

FP Corporation

FP is engaged in the manufacture and marketing of simplified food containers made form compound resins, as well as the marketing of packaging materials and packaging machinery. Co.'s principal products include trays, trays for take-out meals, lunch boxes and other food containers. Co. is engaged in the sale of metal mold and machineries; the manufacture and sale of precision part casting made by synthetic resin, the provision of leasing services, mail-order marketing using catalogues for food containers and packaging materials, as well as information systems. Co. is also involved in the leasing of real estate and the manufacture of corrugated containers.

Fujitsu Limited

Fujitsu is the parent company of a group engaged in the information and communication technology businesses. Technology Solutions segment provides system integration, application development and integration, system consulting, IT and business process outsourcing services, cloud computing, SAP and Oracle applications services and managed infrastructure services (network and communication, technical and maintenance and service desk services). The segment also offers security platforms, servers, storage systems and software. Ubiquitous Solutions segment offers desktop PCs, notebook PCs, mobile phones and wearable devices. Device Solutions segment offers LSI devices and electronic components.

Glodon Company Limited Class A

GLODON COMPANY LIMITED, formerly GLODON SOFTWARE COMPANY LIMITED., is a China-based software company. The Company's software products can be divided into tool software products and management software products. The Company is also engaged in engineering cost business, engineering construction business, engineering information business and overseas business. The Company's business areas include Beijing, Northern China region, Northeastern China region, Northwestern China region, Central and Southern China region, Eastern China region, Southern China region, Southwest China region and overseas markets.

HC Group Inc.

HC Group Inc Formerly known as HC International, Inc.. HC Group Inc., formerly HC International, Inc., is a China-base company principally engaged in the provision of data services. The Company operates its business mainly through three segments. The Information Service segment mainly provides its product, Mai Mai Tong. The Transaction Service segment mainly provides supply chain finance platform services. The Data Service mainly provides advanced technology, big data and digitalization data services.

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.

Integrafin Holdings

Integrafin Holdings PLC offers a differentiated, premium platform service focused on financial advisers servicing affluent clients with investable assets of sufficient scale to warrant more complex service provision. Co. seeks to differentiate its proposition by focusing both on comprehensive platform functionality and high touch, cost-efficient “human” client service with a long term, falling operating cost ratio measured against funds under direction (FUD).

JD.com Inc. Sponsored ADR Class A

Jiangsu Yangnong Chemical Co. Ltd. Class A

Jiangsu Yangnong Chemical is engaged in the manufacture, process, and sale of synthetic pyrethroids products and other fine chemicals products used in agricultural and public health sectors. Through its subsidiary, Co. is also engaged in manufacture, processing, sale and application services of pesticide and midbody; technology development; import and export of technology; and act as an agent for different kind of commodity goods . Co. has two main business segments which compriesd of methrin for public health use and methrin for agricultural use.

Jiangxi Zhengbang Technology Co. Ltd. Class A

Jiangxi Zhengbang Technology is engaged in the manufacture and sale of feedstuffs and premix compounds for livestock and poultry; research, manufacture and sale of feed additives; breeding, processing and sale of livestock, poultry and aquatic products; operation of meat and meat products; and acquisition of foodstuffs. Through its subsidiaries, Co. is also engaged in the manufacture and sale of stockbreeding machines; and manufacture and sale of biological products. Co.'s products include complete feed, concentrate feed, premix feed, breeding pigs, fish fries and others.

Kobe Bussan Co. Ltd.

Kobe Bussan is a supermarket operator. Along with its affiliates, Co. operates in four business segments. Business Supermarket segment is engaged in the production, wholesale and retail of food products targeted at business users, offering products from other manufacturers, as well as products produced in the factories owned by Co. and manufacturers in collaboration with Co. Kobe Cook segment offers cooked food products. Cook Inoventure segment is engaged in the restaurant and education businesses. Eco-Regenerated Energy segment operates solar power plants and sells renewable energy to electric power companies. As of Oct 31 2017, Co. operates 780 business supermarkets throughout Japan.

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.

Life

Life is mainly engaged in the general retail business. Co. operates retail chain stores named "Life" in Tokyo metropolitan area and Kinki area. As of Feb 28 2017, Co. maintains 264 stores. Co. offers foods, clothing, accessories, shoes, cosmetics, toys, books, stationery, beddings, interior goods and other daily use merchandise. In addition, Co., through its group companies, is engaged in the provision of credit card/electronic money service, casualty insurance agency services and training services for retailing business, as well as the manufacture and sale of food products, and the provision of transportation services.

Metro Inc.

Metro is a food retailer and distributor that operates supermarkets, discount stores and drugstores in Canada. Co. operated 343 supermarkets under the Metro and Metro Plus banners, nine stores under the Adonis banner, and 213 discount stores under the Super C and Food Basics banners. Co. also acts as a distributor for medium-surface food stores and convenience stores. Co. also acts as franchisor and distributor for 181 franchised Brunet Plus, Brunet, Brunet Clinique, and Clini Plus drugstores, owned by independent pharmacists; and operated 73 drugstores under the Metro Pharmacy and Drug Basics banners. Co. also supplies non-franchised drugstores and various health centres.

MMC Norilsk Nickel PJSC

MMC Norilsk Nickel PJSC is a global producer of nickel, palladium, platinum and copper. Co. also produces by-products, such as cobalt, chromium, rhodium, silver, gold, iridium, ruthenium, selenium, tellurium and sulfur. Co. is involved in prospecting, exploration, extraction, refining and metallurgical processing of minerals, as well as in production, marketing and sale of base and precious metals. Co.'s production facilities are located in five countries: Russia, Australia, Botswana, Finland, and South Africa. Co.'s production units are integrated and include: the Polar Division (the Taimyr Peninsula); and the Kola Mining and Metallurgical Company (Kola MMC or the Kola Peninsula).

NEL ASA

NEL ASA develops diagnostic tests for early detection of diseases. Co.'s patented method is based on identifying disease-specific gene expression signatures from sample materials, such as blood. Co.'s products in development phase include MCItect, for patients with Mild Cognitive Impairment (MCI) aimed to detect Alzheimer disease within two years prior to onset of dementia, and ADtect, for the detection of mild to moderate Alzheimer disease, as well as one project in discovery phase, namely AMYtect, for brain amyloid detection.

Pinduoduo Inc. Sponsored ADR Class A

Proya Cosmetics (A)

Qianhe Condiment & Food Co. Ltd. Class A

Qianhe Condiment and Food Co., Ltd. is a China-based company principally engaged in the research and development, production and sales of condiment such as soy sauce, vinegar and cooking wine, as well as caramel and other food additives. The Company's soy sauce and vinegar are used under the trademark Qianhe, which is mainly used for cooking in home and catering companies. The Company's caramel is used under trademark Hengtai, which is mainly used for coloring seasonings and foods. The Company mainly distributes its products in the domestic market.

S.F. Holding Co. Ltd. Class A

S.F. Holding Co., Ltd., formerly Maanshan Dingtai Rare Earth & New Materials Co., Ltd., is a China-based company principally engaged in the provision of integrated express logistics services. The Company provides integrated logistics services, such as warehousing management, sales forecasting, big data analysis and settlement management. The Company's logistics products include various express services, such as business express, e-commerce express, warehousing and distribution and international express; heavy cargo transport services, such as general cargo transport and heavy cargo express transport, as well as cold chain logistics services for food and pharmaceutical industries. The Company also offers value-added services, including insured transport, payment collection and others. The Company operates its businesses in domestic and overseas markets.

Shift

SHIFT Inc. is a Japan-based company mainly engaged in the provision of software test services. The Company operates through two business segments. The Enterprise Market segment is engaged in the provision of general service related to quality assurance of software in business systems and information systems for companies of financial industry, distribution industry, manufacturing industry, communication industry and Web services industry. The Entertainment Market segment is engaged in the provision of general services related to quality assurance of software for enterprises providing mobile games, social games, consumer games and other entertainment products.

Swedish Match AB

Swedish Match develops, manufactures, markets, and sells snus and snuff, other tobacco products (cigars and chewing tobacco), and lights (matches and lighters). Snus and snuff are smokeless tobacco products that are produced and sold primarily in Sweden, Norway and the U.S. Other tobacco products represent cigars and chewing tobacco manufactured and sold on the U.S. market. Lights include manufacturing and distribution of matches and lighters. Other operations are primarily the distribution of tobacco products on the Swedish market. Primary brands include General snus, Longhorn moist snuff, White Owl cigars, Red Man chewing tobacco, Fiat Lux matches, and Cricket lighters.

TAL Education Group Sponsored ADR Class A

Tomizone

Tomizone Ltd. Tomizone Limited is a provider of connectivity, analytics and location-based services and software to enterprises, brands and public venues. The Company offers enterprise-grade solutions, focusing on accommodation, transportation and hubs, retail, metro and campus, and hospitality verticals. The Company is engaged in the development and commercialization of wireless fidelity (Wi-Fi) software. The Company operates in Australia and New Zealand. The Company offers a range of technology products and services that enable enterprises, venues and brands to connect with their customers. The Company's product, Lightswitch Connect, represents a connectivity, analytics and location-based services solutions. The Company's Concierge 3 Series hotspot-in-a-box provides Wi-Fi in a small environment, such as a cafe, office lobby or floor plan of approximately 200 square meters. Its Chauffeur series provides access to anyone on any backhaul type.

Unicharm Corporation

Unicharm is mainly engaged in the manufacture and sale of baby and child care products, feminine care products, and pet care products. Co. operates in three business segments: Personal Care, Pet Care and Others. Co.'s principal products include baby and child care related products such as disposable diapers; feminine care related products such as sanitary napkins, tampons, sanitary shorts, and panty liners; healthcare related products such as napkin-type incontinence pads, pants-type diapers (outer), tape-type diapers (outer), pants-type specialized urine pads (inner), pet food, pet toiletry products, and industrial material related products.

Zhongsheng Group Holdings Ltd.

Zhongsheng Group Holdings is an investment holding company. Co. has dealership agreements to operate its 4S dealerships for a portfolio of automobile brands, consisting of luxury automobile brands, and mid-to-high end automobile brands. Through its one-stop automobile shop business structure, Co. provides a range of new automobiles and after-sales products and services in each of its 4S dealerships. Co.'s after-sales businesses provide spare parts, automobile accessories, repair and maintenance services, detailing services, and other automobile-related products and services. As of Dec 31 2014, Co. had 191 automobile dealerships across the People's Republic of China.

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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