Vermilion Int'l Compass: Global Equity Strategy
Stay Tactically Overweight DefensivesOur 2023 outlook, initially discussed in our January 6th 2023 Int'l Compass, was for $93 to cap upside on the MSCI ACWI (ACWI-US); this has again proven prescient. Since late-January/early-February we have recommended shifting to defensives, and MSCI ACWI defensive Sectors including Health Care (IXJ-US), Utilities (JXI-US), and Consumer Staples (KXI-US) are now hitting 3-4-month RS highs. With the ACWI-US just now starting to turn down after testing $93, we continue to recommend a tactical overweight to the aforementioned defensive Sectors, and also to gold miners (GDX-US). Important downside targets on ACWI-US continue to be $86, $84, and $75-77.
Remain Overweight Europe, Japan, and MSCI EAFE. Non-U.S. equities continue to outperform, with RS uptrends intact on the STOXX Europe 50, Japan's TOPIX and TOPIX Small, and on the MSCI EAFE (EFA-US). Remain overweight these areas... see pages 2-3.
Levels to Watch in Europe. The EURO STOXX 50 is testing resistance at 4400-4415, but as long as it remains above 4000 support we are bullish from a price perspective. The STOXX Europe 50 recently hit new highs, and we are bullish from a price perspective as long as it is above 3800... see page 2.
China/Emerging Markets Deteriorating. China/EM is by no means leadership. With that said, as long as our support levels hold, we are constructive from a price perspective. Supports include $37-37.50 on MSCI EM (EEM-US), 3215 on China's Shanghai Composite, and 19,000 on Hong Kong's Hang Seng.
Actionable Theme: Defensives. We have been recommending shifting into defensives since our February 2, 2023 Int'l Compass, and there is no reason to stop now with defensives officially emerging as leadership. We highlight our favorite names to buy/stay long within Consumer Staples, Utilities, Health Care, and gold miners... see pages 4-19.
Ajinomoto and its affiliates are mainly engaged in the manufacture and sale of food products, fine chemicals and pharmaceuticals in Japan and overseas. Co.'s principal food products for the retail and commercial markets include umami seasoning "AJI-NO-MOTO®," "HON-DASHI," and "Cook Do®," processes foods, frozen foods, instant noodles, coffee products, sweeteners and umami seasonings for processed food manufacturers. Co. also manufactures feed-use amino acids, amino-acids for pharmaceuticals and foods, amino acid-based products and specialty chemicals, as well as pharmaceuticals for gastrointestinal and metabolic diseases.
Grupo Bimbo is a holding company. Through its subsidiaries, Co. is engaged in the production, distribution, sale, and export of bread, cookies, cakes, snacks, tortillas, potato chips, chocolates, and confectionery products. Through its subsidiaries, Co. organizes its businesses in two divisions as follows: the bakery division and the appetizers, salads, confectionery and pastry divison operated by Bimbo S.A. de C.V., and Barcel S.A. de C.V., respectively.
Heineken Holding is a holding company based in the Netherlands. Through its subsidiaries, Co. promotes the continuity, independence and stability of the Heineken group. This creates the conditions which enable Heineken N.V. to pursue its long-term policy in the interest of the shareholders, the staff and other stakeholders. Co. does not engage in operational activities itself. These have been assigned within the Heineken group to Heineken N.V. and its subsidiaries and associated companies. Through Heineken N.V., Co. is involved in the brewing and selling of beer.
Koninklijke Ahold Delhaize is an international group of supermarket and foodservice operators based in Europe and the U.S. Co. operates supermarkets and convenience stores. In addition, Co. provides online food retailing services. Co. also finances, develops and manages store sites and shopping centers. Ahold Europe comprises Albert Heijn in the Netherlands and Belgium; Etos, Gall & Gall, and albert.nl in the Netherlands; and Albert / Hypernova in the Czech Republic and Slovakia. Ahold USA is organized into four retail divisions: Giant Carlisle, Giant Landover, Stop & Shop New England, and Stop & Shop New York Metro. The Peapod online business is also part of Ahold USA.
Loblaw is a Canadian food distributor and provider of general merchandise, drugstore and financial products and services. Traditional food offerings remain at the core of Co.'s business. Co. operates conventional, superstore, and hard discount stores. Co. offers products through control label program with famous brands including President's Choice, no name and Joe Fresh Style. Co. also offers President's Choice Financial services and offers the PC points loyalty program.
Nan Nan Resources Enterprise is an investment holding company. Co. is principally engaged in mining and sales of coal. As of Mar. 31, 2014, Co. owned mining rights Kaiyuan Open Pit Coal Mine, which has estimated remaining coal reserve of approx. 13,960,000 tonnes, and an exploration right of Zexu Open Pit Coal Mine, which has estimated measured coal resources and estimated indicated coal resources of 56,580,000 tonnes and 62,800,000 tonnes respectively.
Varun Beverages Limited is engaged in manufacturing, selling, bottling and distribution of beverages of Pepsi brand. The Company produces and distributes a range of carbonated soft drinks (CSDs), as well as a selection of non-carbonated beverages (NCBs), including packaged drinking water. PepsiCo CSD brands produced and sold by the Company include Pepsi, Diet Pepsi, Seven-Up, Mirinda Orange, Mirinda Lemon, Mountain Dew, Seven-Up Nimbooz Masala Soda, Seven-Up Revive and Evervess Soda. PepsiCo NCB brands produced and sold by the Company include Tropicana Slice, Tropicana Frutz, Seven-Up Nimbooz, as well as packaged drinking water under Aquafina brand. In addition, it also franchises for Ole brand of PepsiCo products in Sri Lanka. It operates in over 20 production facilities across India and over five production facilities in its international licensed territories. It franchises for various PepsiCo products spread across approximately 20 States and over two Union Territories in India.
Yakult Honsha is a food and beverage manufacturing group. Along with its affiliates, Co. operates in two business segments: beverages and food, and pharmaceutical. The Beverages and Food segment manufactures and sells dairy products, beverages including juices and soft drinks, as well as noodles and health food. Co. is also involved in the transportation of its products and the sale of materials. The Pharmaceuticals segment is engaged in the manufacture and sale of medicines to local hospitals and pharmacies through pharmaceutical wholesalers. In addition, Co. is engaged in the production and sale of cosmetics and the operation of its professional baseball club.
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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