Report
Dave Nicoski ...
  • Ross LaDuke
EUR 233.15 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

MSCI EM in early stages of bottoming

Our 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.
Underlyings
Aboitiz Power Corp.

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 S.p.A.

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 S.A.

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 SA

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 Limited Class A

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 SA-Eletrobras

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 Co. Inc.

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 Limited

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.

CP All Public Co. Ltd.

CC.P. All Public Co. is mainly engaged in the businesses of operating convenience stores, cash and carry, payment centers and the related supporting services. Co. operates convenience stores under the 7-Eleven trademark and franchises to other retailers in the territory of Thailand. Co. has three segments: Segment 1, which consists of convenience stores; Segment 2, which consists of cash and carry; and segment 3, which consists of Co.'s other operations including bill payment services. At Dec 31 2014, Co. owned 3,570 7-Eleven convenience stores, 3,916 7-Eleven convenience stores under management agreements to other retailers and 641 7-Eleven convenience stores under sub-license agreements.

Davide Campari-Milano N.V.

Davide Campari-Milano is engaged in manufacturing spirits industry with an extensive product portfolio in three business lines: spirits, which includes internationally brands such as Appleton, Campari, Carolans, SKYY vodka and Wild Turkey, as well as brand in local markets including Aperol, Cabo Wabo, Cynar, Frangelico, GlenGrant, Ouzo 12, X-Rated Fusion Liqueur, Zedda Piras, and Brazilian brands Dreher, among others; wines, which main regional brands are Liebfraumilch, Mondoro, Odessa, Riccadonna, Sella&Mosca and Teruzzi&Puthod; and soft drinks, which covers the extended ranges of Crodino and Lemonsoda. Co. operates in 190 countries with registred positions in Europe and the Americas.

Electricite de France SA

Electricite de France is an integrated energy company with a presence in a range of electricity-related businesses: nuclear, renewable and fossil-fuel fired energy production, transmission, distribution, marketing as well as energy management and efficiency services, along with energy trading. Co. is an integrated energy company engaged in all aspects of the energy business: generation, transmission, distribution, supply and trading of energies. Co. is an electricity operator in France and abroad. The breakdown used by Co. for its activities is as follows: France; United Kingdom; Italy; Other International; and Other activities.

Genting Plantations Bhd.

Genting Plantations is an investment holding company, which is engaged in the provision of management services. Through its subsidiaries, Co. is also engaged in plantation, property development and genomics research and development. Co. operates within four segments: plantation, which comprises mainly activities relating to oil palm plantations; property, which comprises mainly activities relating to property development, property investment and the operation of a golf course; biotechnology, which comprises mainly activities relating to genomics research and development; and others.

Greencore Group Plc

Greencore Group is engaged in convenience food business. Co. provides a range of food to go products supplemented by other chilled, frozen and ambient foods to major retail and food service customers in the U.K. and the U.S. Co.'s operating segments include: Co.'s Convenience Foods segment consist of convenience foods U.K. and convenience foods U.S., which is engaged in the production and sale of convenience food; and Ingredients & Property, which is engaged in the distribution of edible oils and molasses and the management of Co.'s property assets. Co. has seven U.S. convenience foods facilities and 15 U.K. convenience foods facilities.

Grupo LALA SAB de CV Class B

Grupo Lala SAB de CV is a Mexico-based company principally engaged in the dairy products manufacturing. The Company's product portfolio comprises milk products such as delectated, light, whole, skim, extra calcium, fruit milk; yoghurts, cheese, butter, margarine and probiotics, among others. The Company offers also juices and gelatin desserts. Additionally, the Company owns Lala Institute (Instituto Lala) which supports and conducts nutrition research, provides food counseling and promotes healthy lifestyle, among others. The Company is a parent of Comercializadora de Lacteos y Derivados SA de CV.

Guangdong Haid Group Co. Limited Class A

Guangdong Haid Group Co., Limited is a China-based company principally engaged in the production and distribution of feedstuffs. The Company's main products include feedstuffs for aquatic products, livestock and poultry, aquatic animal seedlings, animal health products and biological products, as well as pigs, among others. The Company also provides integrated solutions for breeding and culturing process. The Company distributes its products in domestic market and to overseas markets.

Gulf Energy Development Public Company Limited

Gulf Energy Development PCL is a Thailand-based holding company primarily engaged in the energy sector. The Company generates and sells electricity to the Electricity Generating Authority of Thailand (EGAT), as well as industrial users through Independent Power Producer (IPP) and Small Power Producers (SPP) programs. The Company sells electricity to the Provincial Electricity Authority (PEA) through the Very Small Power Producers (VSPP) program. The Company is also involved in the business of renewable energy, such as solar rooftops and biomass energy. The Company has investments in the natural gas distribution business.

Japfa Comfeed Indonesia

PT Japfa Comfeed Indonesia Tbk is an Indonesia-based company primarily engaged in manufacturing animal feed. Its business is classified into four divisions: poultry, aquaculture, beef cattle, as well as trade and other services. Its poultry division comprises three units, namely poultry feed unit, poultry breeding unit, as well as commercial farming and consumer product unit. The business activities of its aquaculture division include fish and shrimp feed manufacturing together with fish and shrimp farming. Its beef cattle division includes vertically integrated businesses, such as beef cattle breeding, fattening and slaughtering, as well as value-added meat production. The business of the trade and other services division includes woven plastic bags production, copra pellet processing, container depot, as well as animal vaccines and health products manufacturing.

Kyushu Electric Power Company Incorporated

Kyushu Electric Power is an electric company engaged in the generation, transmission and distribution of electric power mainly in the Kyushu Region with 78,619 million kWh of electricity sales as of Mar 31 2017. Co. is also engaged in the research, design, construction and supervision of electric and civil engineering construction work, the environment protection for power plants; the sale of electric machine tools, natural uranium, gas and LNG; the new energy generation and heat supply businesses; the data communication, broadband, fixed phone and IT related businesses; the environmental, recycling, real estate, housing and nursing care businesses.

M. Dias Branco SA Industria e Comercio de Alimentos

M. Dias Branco Industria e Comercio de Alimentos is engaged in the production of biscuits and pasta under brand names Richester(r), Adria(r), Isabela(r), Basilar(r), Zabet(r) and Fortaleza(r).

Neto M.E. Holdings Ltd.

Neto ME Holdings Limited. Neto ME Holdings Ltd is an Israel-based company active in the food industry. The Company operates in the kosher food sector, as an importer, producer and distributor under various categories with brands such as: TibonVeal, beef and poultry products; Williger, canned products; Delidag, fish and fish products; Three Bakers, frozen baked products, and Magic, which produces ready meals. In addition, it operates such lines of products as: import and distribution of cheeses from Western European countries and of selected dairy producers in Israel; distribution of chilled salad products made by Salatei Mahsany and marketing and distribution of fresh fruits and vegetables, through Bickurei Hasade Darom. In addition it exports fish products, ethnic and pastry products and liquorices, among others. The products are distributed through a logistics center, and by a fleet of 150 trucks.

NH Foods Ltd.

NH Foods is mainly engaged in the meat processing and packaging businesses. Along with its subsidiaries and associated companies, Co. operates in four business divisions: processed foods, fresh meats, related products and overseas. The Processed Foods business division manufactures and sells hams, sausages, prepared meals and other processed foods. The Fresh Meats business division is engaged in the pig, cattle and broiler farming business as well as the manufacture and sale of fresh meats and organic fertilizer and vegetables. The Related-Products business division manufactures and sells marine products and dairy products. The Overseas division produces and sells food items overseas.

Orsted

Orsted is a renewable energy company based in Denmark. Co. is engaged in developing a renewables portfolio based on competences in offshore wind, bioenergy, and energy solutions. Co. is active in deploying offshore wind and converting existing coal- and gas-fired power stations to sustainable biomass, providing a heat and power supply which is both green and flexible. Co. divides its operations into four businesses: Wind Power, Bioenergy & Thermal Power, and Distribution & Customer Solutions. The Bioenergy & Thermal Power and Distribution & Customer Solutions businesses jointly constitute Co.'s Danish utility business. Co. maintains activities primarily in Northwestern Europe.

Ros Agro PLC

Ros Agro, through its subsidiaries, is engaged in agricultural production, cultivation of pigs, processing of raw sugar and production of sugar from sugarbeet, vegetable oil production and processing. Co. and its subsidiaries are organised on the basis of four segments: Sugar, which is engaged in the production and trading operation with white sugar; Meat, which is engaged in the cultivation of pigs and selling of consumable livestock to third parties; Other agriculture, which is engaged in the cultivation of plant crops and dairy cattle livestock; as well as Oil, which is engaged in vegetable oil extraction, production and sales of mayonnaise, consumer margarine, and bottled vegetable oil.

Sapporo Holdings Limited

Sapporo Holdings is a holding company. Co., through its affiliates, is mainly engaged in the manufacture and sale of alcohol and beverages. Japanese Alcoholic Beverages segment manufactures and sells beer, Happo-shu (low-malt beer), wine and Shochu (distilled spirits) as well as sells imported beer, wine and spirits. International segment manages Co.'s international liquor business. Food & Soft Drinks segment manufactures and sells drinking water and food products as well as operates a coffee shop chain. Restaurants segment operates a wide variety of restaurants. Real Estate segment operates and manages complex facilities. Others segment manufactures and sells miso pastes and instant soups.

Shandong Xiantan (A)

Shandong Xiantan Co., Ltd. is a China-based company principally engaged in cultivation, slaughtering, processing, and sale of broilers. The main activities include cultivation of parent generation breeding hens, the hatching of chicks, the production of feed, the cultivation and slaughtering of commercial generation broilers, as well as chicken processing and sale. The main products of the Company contain commercial generation broilers as well as chicken products including drumsticks, chicken breasts, chicken wings, and chicken dogmeats, among others. The Company distributes its products in China market.

Shanghai Maling Aquarius (A) (SC SH)

Shanghai Maling Aquarius is engaged in the food and beverage manufacturing industry. Co.'s main products are comprised of canned food, flavorings, packaging drinks, including oolong tea, fresh orange juice and green tea, and other packaging food and beverage products. Co. is also engaged in assets management; electronic commercial tradings; provision of information collection activities and economic information services; sales of food, tinplates, flavorings, tinplate printing, chemical raw materials, food processing machineries and parts; domestic trading; and import and export of various commodities and technology.

Sheng Siong Group

Sheng Siong Group is an invetment holding company. Through its subsidiaries, Co. is engaged in the provision of supermarket supplies and supermarket operations with 43 supermarket/grocery stores located all across Singapore.

Shufersal Ltd.

Super-Sol is engaged in the retail marketing of food and other products, in supermarket stores. Co. is engaged in the operation of a supermarket chain and retail sales of supermarket goods in Israel. As of Dec 31 2003, Co. was operating 161 stores in six supermarket chains: Super-Sol - 38 stores, Hyper-Netto 68 stores, Zol Le Mehadrin (formerly - Birkat Rachel) - 8 stores, Universe Club - 9 stores, Cosmos - 17 stores and Food Warehouses - 21 stores. Net-Sal represents an additional marketing vehicle of Co. It enables Co.s customers to place home-delivery orders for supermarket products via the telephone, fax or Internet.

Sichuan Chuantou Energy Co. Ltd. Class A

Sichuan Chuantou Energy Stock is engaged in the investment and development activities; the operation and management of power generation and related businesses; the development and operation of new power projects; the provision of consultation services for power package products and information; the development and operation of railroads, transportation automation systems and intellectual control products. Through its subsidiaries, Co. is engaged in the hydropower generation; electric power project investment; the repairs and maintenance, installation and leasing electric power equipment; the operation of low grade coal; and the production and sale of electric power.

Stock Spirits Group

Stock Spirits Group is a spirits company. Co. along with its subsidiaries are engaged in the production and distribution of branded spirits in Central and Eastern Europe. Co.'s spirits include vodka, flavoured vodka, rum, brandy and herbal bitter liqueurs. Co. has more than 40 brands and export internationally to more than 40 countries worldwide. Co.'s brands include Zoladkowa de Luxe, Lubelska, Zoladkowa Gorzka, Stock Prestige, 1906, Fernet Stock, Bozkov, Amundsen, Keglevich, Limonce, Stock Original, Keglevich, Golden, Stock 84, Fernet Stock Citrus, and Hammerhead. Co. has operations in Poland, Czech Republic, Italy, Slovakia, Croatia, and Bosnia and Herzegovina.

Tokmanni Group Oyj

Tokmanni Group Oyj is a Finland-based company, which is primarily involved in the retail industry. The Company operates a retail chain with more than 150 stores in Finland. Tokmanni Group Oy's product assortment comprises approximately 25 000 active stock keeping units (SKU's) in six different product categories, such as home cleaning and personal care, groceries, clothing, tools and electrical equipment, leisure and home electronics, home and garden decoration. The home cleaning and personal care product category is divided into four subcategories: personal care, home care, household paper products, other products. The groceries product category is divided into six subcategories: beverages, snacks, cookies and candies, pet food and pet accessories, diet and nutrition, canned food, fresh food. The clothing product category includes mainly casual wear for daily use. The tools and electrical equipment product category includes various do-it-yourself goods, power, hand and other tools.

WH Group Ltd. (HK)

WH Group is an investment holding company. Through its subsidiaries, Co. operates its pork business through four segments. Packaged Meats is engaged in the production, wholesale and retail sales of low temperature and high temperature meat products. Fresh Pork is engaged in the slaughtering, wholesale and retail sales of fresh and frozen meat. Hog is enageged in hog farming. Others segment is engaged in the slaughter and sale of poultry, manufacture and sale of packaging materials, provision of logistics services, operate a chain of retail grocery stores, produce flavoring ingredients and natural casings, and sale of biological pharmaceutical materials.

X5 Retail Group N.V. Sponsored GDR RegS

X5 Retail Group is a holding company. The main activity of Co. is the development and operation of grocery retail stores. Co. operates a retail chain of soft-discount, supermarket and hypermarket stores under the brand names "Pyaterochka", "Perekrestok" and "Karusel" in major population centres in Russia, including but not limited to Moscow, St. Petersburg, Nizhniy Novgorod, Rostov-on-Don, Kazan, Samara, Lipetsk, Chelyabinsk, Perm, Ekaterinburg and Kiev, Ukraine.

Yonghui Superstores Co. Ltd. Class A

YONGHUI SUPERSTORES CO., LTD. is a China-based company, principally engaged in the operation of regular chain supermarkets. The Company primarily engages in the dealing of fresh meat products, agricultural products, processed foods, daily necessities, clothing, household appliances, electronic products and imported goods, among others. The Company operates its businesses principally through the operation of general merchandise stores, superstores and supermarkets, among others. The Company is also engaged in the provision of related services. The Company mainly conducts its businesses within domestic 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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