Report
Dave Nicoski ...
  • Ross LaDuke
EUR 233.53 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

USD weakness a tailwind for int'l markets

With markets showing signs of weakening at logical resistance as outlined in last week's Int'l Compass - we recommend being selective in new purchases. At the same time we are seeing a number of indicators that are giving signals conducive to higher equity prices, meaning global equities may be gearing up for an eventual breakout topside resistance. Below we highlight some attractive and actionable themes along with indicators that support our overall constructive outlook.

• USD (DXY) breaking down; Euro, CAD breaking out. Throughout all of 2019 we have highlighted our belief that a weakening USD is likely to be a tailwind for EM and int'l equities. With the DXY breaking down below major support, we believe weakness is likely to continue which should aid int'l equities in eventually breaking topside resistance... see chart below and pages 2-3.

• U.S. & European high yield spreads; Dr. Copper. Both U.S. and European high yield spreads continue to narrow and patterns look very similar to early January - a time when global equities began a multi-month rally. Additionally, the price of copper is holding above key support. Altogether this tells us global growth is not deteriorating and helps lead us to our overall constructive outlook... see page 4.

• Actionable Theme: Metals & Mining. A weaker USD and low global yields is providing a boost to metals & mining stocks, especially within the precious metals space -- add exposure... see page 5.

• Actionable Theme: Consumer Staples. With global equities at resistance we are erring on the side of caution here. Still, we believe our Staples recommendations can outperform whether global equities break out or not... see page 6.

• Actionable Theme: Thailand. Thailand's SET index exhibits a bullish price reversal and RS is bottoming -- add exposure... see page 7.

• Actionable Theme: Asia/Pacific Airport Operations (Group TR-08). Overweight this Group which is breaking out to all-time price and RS highs. Actionable stocks include Airports of Thailand (AOT-TH) and Sydney Airport (SYD-AU)... see page 8.
Underlyings
African Rainbow Minerals Limited

African Rainbow Minerals is engaged in the exploration, development, operation and holding of interests in the mining and minerals industry. Co.'s operations are focused on precious metals, ferrous metals and alloys, which include platinum group metals, nickel, iron ore, manganese ore, chrome ore, ferromanganese and ferrochrome alloys. Co. maintains an investment in Harmony. Co.'s partners at its South African operations are Anglo Platinum, Assore, Impala Platinum, Norilsk Nickel and Xstrata Coal South Africa. Co. is organized in four operating divisions: ARM Platinum (which includes platinum and nickel), ARM Ferrous, ARM Coal and ARM Exploration.

Agnico Eagle Mines Limited

Agnico-Eagle Mines is a gold mining company with mining operations in Canada, Mexico and Finland. Co. earns a proportion of its revenues from the production and sale of gold in both dore bar and concentrate form. The remainder of revenue and cash flow is generated by the production and sale of byproduct metals. The revenue from byproduct metals is mainly generated by production at the LaRonde mine in Canada (silver, zinc, copper and lead) and the Pinos Altos mine in Mexico (silver).

Airports of Thailand Public Co. Ltd.

Airports of Thailand Public Co. is engaged in airport and hotel business in Thailand. Co. is the operator of the airport business in Thailand, which includes airport management and development of Thailand's international airports. As of Sept 30 2015, Co. operated six international airports which include the Suvarnabhumi airport, Don Mueang airport, Chiang Mai airport, Hat Yai airport, Phuket airport and Mae Fah Luang-Chiang Rai airport. The airports provide both domestic and international flights.

Alamos Gold Inc.

Alamos Gold is engaged in the exploration, mine development, and the mining and extraction of precious metals, primarily gold. Co.'s s primary asset is the Mulatos Mine and holds the mineral rights to the Salamandra group of concessions in the State of Sonora, Mexico, which includes several known satellite gold occurrences.

Barrick Gold Corporation

Barrick Gold is engaged in the production and sale of gold, as well as related activities such as exploration and mine development. Co. also produces copper and hold interests in oil and gas properties located in Canada. Co.'s mining operations are concentrated in three regional business units: North America, South America and Australia Pacific. Co. also hold a 73.9% equity interest in African Barrick Gold plc that owns gold mines and exploration properties in Africa. Co.'s copper business unit contains producing copper mines located in Chile and Zambia; and a mine under construction located in Saudi Arabia.

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.

Charoen Pokphand Foods Public Co. Ltd.

Charoen Pokphand Foods Public Co. operates in agro-industrial and integrated food businesses, with operations located throughout Thailand and overseas. Co.'s businesses comprise of two segments: livestock business, which consists of chicken, duck and pigs; and aquaculture business, which consists of shrimp and fish. Co.'s businesses are vertically integrated, sourcing raw materials for animal feed production, manufacturing animal feed, breeding animals, farming animals for commercial purposes, processing meat, producing ready-to-eat food products. Co.'s main products are: animal feed; animal farm products such as animal breeder, live animal and meat; and processed foods and ready meals.

Coca-Cola HBC AG

Coca-Cola Hellenic Bottling Co. produces, sells and distributes an extensive portfolio of non-alcoholic ready-to-drink beverages. Co.'s business is engaged in producing, selling and distributing non-alcoholic ready-to-drink beverages under bottlers' agreements with The Coca-Cola Company. In some Territories, Co. also produces, sells, distributes and markets its own brands of juice and Water beverages. In addition, Co. bottles and distributes beer in Bulgaria and Former Yugoslav Republic of Macedonia and Co. distributes a selected number of third party premium spirit brands in certain central and eastern European operations.

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.

Danone SA

Danone is engaged in activities in the global food and beverages industry. Co. operates in four markets: Fresh Dairy Products (Co. produces and sells yogurts, fermented dairy products and other fresh dairy products); Waters (Co. produces and sells natural waters as well as flavored and vitamin-enriched waters products); Early Life Nutrition (Co. produces baby formula, milk-and fruit-based desserts, cereals, small pots of baby food and ready-made baby food); and Medical Nutrition (Co. develops adult and pediatric clinical nutrition products to be taken orally, or through a catheter in the event of malnutrition related to illness or other causes).

Desjardins 1-5 year Laddered Canadian Government Bond Index

Great Wall Enterprise Co. Ltd.

Great Wall Enterprise is engaged in the purchase, transportation and sale of vegetable oilseed, rice bran, seeds and wheat; manufacture and processing of oil and packaging products; purchase, transportation, manufacture, processing, wholesale and retail of vegetable oil, fertilizer, feeds, wheat bran, bean cakes, flours, starch, cereals, noodles, biscuits, bread, canned food, dairy products, frozen food, juices and beverages; animal husbandry; import, export and sale of alcohol; sale of animal and western medicines; operation of supermarkets; electrical poultry slaughtering; processing and sale of meat; provision of storage, import and export trading services; and real estate businesses.

Harmony Gold Mining Co. Ltd.

Harmony Gold Mining Company and its subsidiaries are engaged in gold mining and related activities, including exploration, extraction and processing. Co.'s principal product, gold bullion is produced at its operations in Witwatersrand Basin and the Kraaipan Greenstone Belt, South Africa and Morobe Province, Papua New Guinea ("PNG").

Intouch Holdings Public Company Limited

Ivanhoe Mines Ltd. Class A

Ivanhoe Mines is a mining exploration company engaged in the exploration, development and recovery of minerals and precious gems from its property interests located primarily in Africa. Co.'s property interests include the Kamoa Project, the Platreef Project and the Kipushi Project. The Kamoa Project is located in the Democratic Republic of Congo and is a copper-producing property. The Platreef Project is located in South Africa and is a property that produces platinum-group elements, in addition to gold, nickel and copper. The Kipushi Project is a property located in the Democratic Republic of Congo and produces zinc and copper.

Jasmine International PCL

Jasmine International Public Company Limited is a Thailand-based holding company engaged in integrated telecommunication service provider. The Company and its subsidiaries categorize the businesses into four groups: broadband business, which is the provision of high-speed linkage for broadband Internet and software development, distribution, and services of general software including software systems that support value-added services for broadband business; telecom network and service provider business including the provision of marine services and submarine optical fiber maintenance services on the eastern and western coast lines and the provision of international private leased-circuit (IPLC); system integration business, which is the operation of telecom system integration and cloud computing with full services, and other businesses, which are the operation of space rental and related services for Jasmine International Tower.

Kinross Gold Corporation

Kinross Gold is engaged in the mining and processing of gold and, as a by-product, silver ore and the exploration for, and the acquisition of, gold bearing properties in the Americas, the Russian Federation, West Africa and worldwide. As of Dec 31 2013, Co.'s proven mineral reserves for gold and silver were 1,122 ounces and 1,179 ounces respectively.7,883 7,883 7,883

Lien Hwa Industrial Corp.

Co. is engaged in agricultural products; grain processing; multi-level processing of grain; purchasing and sale of fructose, glucose and other raw materials; processing, purchasing, transport, manufacturing and sale of wheat flour, wheat bran, rice flour, buckwheat flour, barley without bran, oatmeal, barley bran, rice and coarse cereals; manufacturing, transport and sale of yacht.

Lundin Gold

Lundin Gold is engaged in the acquisition, exploration and development of gold and base metal properties.

MAG Silver Corp.

MAG Silver is an exploration company conducting work on mineral properties it has staked or acquired by way of option agreement, principally in Mexico. Co. has not yet determined whether the properties on which it is conducting exploration contain any ore reserves that are economically recoverable. The recoverability of these amounts is dependent upon the existence of economically recoverable reserves, Co.'s ability to obtain the necessary financing to complete the development of the interests, and future profitable production, or alternatively, upon Co.’s ability to dispose of its interests on a profitable basis.

Morinaga & Co. Ltd.

Morinaga & Co. and its subsidiaries are mainly engaged in the manufacture and sale of food products. Co. operates in four principal business segments. Food Manufacturing segment is engaged in the manufacture and sale of confectionery including caramel candies, chocolates, candies, biscuits and others; foodstuffs including cocoa mixes, cake mixes and beverages; frozen desserts; and health products. Food Merchandise segment is engaged in the wholesale of confectionery and food products. Real Estate and Services segment is engaged in the real estate leasing and the operation of golf courses. In addition, Co. is engaged in the provision of financial services and bioscience research activities.

Northern Star Resources Ltd

Northern Star Resources is a production and exploration company with a mineral resource base and ore reserves located in regions of Western Australia and the Northern Territory. Co. has six operating segments: Paulsens, Western Australia, Australia, which is engaged in mining and processing of gold; Kundana, Western Australia, Australia, which is engaged in gold mining; Kanowna Belle, Western Australia, Australia, which is engaged in mining and processing of gold; Jundee, Western Australia, Australia, which is engaged in mining and processing of gold; Tanami, Northern Territory, Australia; and Exploration, which is engaged in exploration and evaluation of gold mineralization.

Premium Brands Holdings Corp

Premium Brands Holdings is a holding company. Through its subsidiaries, Co. owns a broad range of specialty food manufacturing and differentiated food distribution businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec and in Washington State and Nevada, in the United States.

Raia Drogasil S.A.

Raia Drogasil is drugstore and pharmaceutical retail group based in Brazil. Co. is primarily engaged in the retail sale of medicine, perfumery, personal care and beauty products, cosmetics and dermocosmetics. Co. operates predominately through two retail brands: Drogasil and Droga Raia. Product lines include Needs, Pluii and B-Well. Sales are carried out by 1,235 stores, located in 18 Brazilian states, including the states of Sao Paulo, Minas Gerais, Rio de Janeiro, Goias, Parana, the Distrito Federal, Santa Catarina, Espirito Santo, Rio Grande do Sul, Bahia, Mato Grosso do Sul and Mato Grosso.

Rio Tinto plc

Rio Tinto is engaged in finding, mining and processing mineral resources. Co. has four product groups: iron ore, which supplies the global seaborne iron ore trade; aluminium, which includes bauxite mines, alumina refineries, and aluminium smelters; Copper and Diamonds, which has managed operations in Australia, Canada, Mongolia and the U.S., and non-managed operations in Chile and Indonesia, with by-product including gold, silver, molybdenum and others such as sulphuric acid, rhenium, and lead carbonate; and Energy and Minerals, which comprises mining, refining and marketing operations across borates, coal, iron ore concentrate and pellets, salt, titanium dioxide and uranium sectors.

Tata Consumer Products Limited

Tata Tea is a holding company based in India. Through its subsidiaries, Co. is engaged in the cultivation, manufacture, sale and export of tea, instant tea, coffee, instant coffee, pepper and in investment holding operations. Co. has five major brands in the Indian market - Tata Tea, Tetley, Kanan Devan, Chakra Gold and Gemini -- catering to all major consumer segments for tea. Co. has a 100% export-oriented unit (KOSHER & HACCP certified) manufacturing Instant Tea in Munnar, Kerala. The Tata Tea and Tetley portfolios of branded offerings caters specifically to the Australian, Middle East, West Asia, North Africa, Poland, Russia and Kazakhstan markets.

Thaifoods Group

Thaifoods Group Public Company Limited is a Thailand-based company engaged in integrated food processing business. The Company operates three principal business segments, which are poultry segment, swine segment and feed mill segment. The poultry segment operates breeder farms, broiler farms, layer farms, hatcheries, chicken feed manufacturing and chicken products starting from selection of parent stocks to distribution of products to customers. The swine segment is involved in contractual great-grandparent stock farms, grandparent stock farms and parent stock farms. The Company conducts the animal feed business for internal uses and sales to non-contractual farmers. In addition, the Company operates other businesses including development and manufacture of vaccines and medical supplies, as well as distribution of animal feed containers and plastic agricultural equipment. Its subsidiaries include Thai Foods Feed Mills Company Limited and Thai Food Layer Farm Company Limited.

Tingyi (Cayman Islands) Holding Corp.

Tingyi Cayman Islands Holdings is an investment holding company and engaged in trading of spare parts of machineries and raw materials. Co. and its subsidiaries are principally engaged in the manufacture and sale of instant noodles, beverages and instant food products.

Universal Robina Corp.

Universal Robina is engaged in a range of food-related businesses. Co. operates within three business segments: the branded consumer food segment which manufactures and distributes a range of salty snacks, chocolates, candies, biscuits, bakery products, beverages, noodles and tomato-based products; the agro-industrial segment, which engages in hog and poultry farming, production and distribution of animal health products and manufacture and distribution of animal feeds, glucose and soya bean products; and the commodity food segment, which engages in sugar milling and refining, flour milling and manufacture and marketing of pasta.

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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