Report
Dave Nicoski ...
  • Ross LaDuke
EUR 238.58 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Global Equities Dive, Testing Major Support

Global equities have gone from extreme bullish sentiment and an extended market to panic and fear over coronavirus concerns. It is virtually impossible to predict what will happen regarding the virus or how much further markets could sell off as a result. Below we explain our outlook based on what we do know, which has been dampened but is not yet dire.

• Indexes Testing Major Support. Major indexes are testing long-term base support and/or support at their respective 200-day MAs. These include the MSCI ACWI, ACWI ex-US, EAFE, EM, S&P 500, Nikkei 225, STOXX 600, Germany's DAX, France's CAC 40, and the Netherlands' AEX. Our technical work suggests these indexes have the potential to find support near current levels, not to mention the recent panic/fear dynamic which has led to short-term oversold readings. At the same time, breakdowns would signal additional downside is likely... see charts below and pages 2-3.

• Energy, Treasury Yields, High Yield Spreads. The global Energy Sector (ACWI Energy) is breaking down to new lows as WTI crude hits lows not seen since January 2019. New lows in any Sector is never a good thing for the broad market, but especially when it is a cyclical Sector such as Energy. Additionally, 10-year Treasury yields are touching all-time lows, surpassing the 1.34% lows from July 2016. New lows in both Energy equities and Treasury yields paints a picture of very weak global growth. Still, US high yield spreads remain below a key level and are not blowing up to the upside, giving us hope that this pullback in equities could be contained to 10% or less... see page 4.

• China, European Banks, Copper. Major Chinese indexes remain constructive with the Shanghai Composite 4.5% off its 2020 highs, while the Shenzhen is outright bullish, hitting 2-year highs a couple days ago. The STOXX 600 Banks index has pulled back to 340 and its 200-day MA, a critical support level. Additionally, copper prices are holding above the critical support zone of $2.45-2.50. The absence of breakdowns in these key risk-on areas is a constructive signal for the broad market... see page 5.

• Actionable Themes: Services, Tech/Software, Financial Services, Real Estate, Staples, and Pharma. Continue to favor growth (Services, Tech/Software, Financial Services) which remains leadership relative to value. Additionally, defensive areas (Real Estate, Staples, Pharma) remain attractive... see pages 6-7.
Underlyings
Amot Investments Ltd.

Amot Investments Ltd. is an Israel-based real estate investment holding company. It focuses on income-generating commercial real estate in Israel, primarily on long-term leasing. Among the 87 non-residential rental properties and 432,000 square meters of rentable space are the central bus-terminals in Jerusalem and Haifa, Si'im and Poleg industrial-parks in Netanya, the Century building in Tel Aviv, and shopping malls in Kefar Saba, Herzeliyah Pituach, Or Akiva, Kiryat Uno and Alonim. On August 2012, the Company acquired Kirya Center, a shopping center in the Israeli city of Ashdod.

Aristocrat Leisure Limited

Aristocrat Leisure is a provider of gaming solutions. Co. is engaged in the design, development and distribution of gaming content, platforms and systems. Co.'s products and services include electronic gaming machines and casino management systems. Co. also operates within the online social gaming and real money wager markets.

Aroundtown SA

Aroundtown Property Holdings Plc (Co.) is a specialist real estate investment group, focusing in the German real estate markets. Co. covers the main real estate segments which benefit from strong fundamentals and growth prospects: residential (through its holding in Grand City Properties S.A.), commercial and hotel properties. The Co.'s vision is buying, redeveloping, turning around and optimizing real estate properties in Germany.

B3 SA - Brasil Bolsa Balcao

B3 SA Brasil Bolsa Balcao, formerly BM&F Bovespa SA Bolsa de Valores Mercadorias e Futuros, is a Brazil-based financial market infrastructure provider. The Company's service offerings range from exchange trading, clearing and other post-trading services to registration of over-the-counter (OTC) transactions. The Company also provides a listing service and acts as central securities depository (CSD). It develops software solutions and offers index licensing services. Its business is divided into four segments: Bovespa, which covers trading, clearing and settlement of equities and equity derivatives; BM&F, which covers trading, clearing and settlement of financial and commodities derivatives; Cetip Securities (Cetip UTVM), covering registration, clearing, settlement and custody systems for fixed-income securities and OTC derivatives, and Cetip Financing (Cetip UFIN), which provides an integrated private electronic system for registration of vehicle and real estate loans.

Barry Callebaut AG

Barry Callebaut is a cocoa and chocolate company, engaged in serving the food industry, from food manufacturers to professional users of chocolate such as chocolatiers, pastry chefs or bakers and products for vending machines. Co. offers a range of chocolate and other cocoabased products with numerous recipes. Co. also provides a comprehensive range of services in the fields of product development, processing, training and marketing. Co. is fully vertically integrated along the entire value chain: from sourcing of raw materials to finished products on the shelf. Co.'s operations are organized in three business units: Cocoa, Food Manufacturers, Gourmet & Specialties Products.

Beijing eGOVA (A)

Beijing eGOVA Co,. Ltd is a China-based company principally engaged in the development and distribution of smart city application software. The Company's main products include digital city management information software, digital law enforcement management software, land and resources information intergrated management software and urban planning and management software, among others. The Company is also involved in the provision of technical support and operation services. The Company operates its business in domestic market.

Bolsa Mexicana de Valores SAB de CV

Bolsa de Valores de Mexico is the only entity in Mexico authorized to act as securities exchange and self-regulatory body, in conformity with the Mexican Securities Market Law. Its activities include among others, the facilitation of the relationship and trading operations of listed securities by establishing facilities and automated mechanisms. Its activities also include providing information on the securities listed on the stock market, establishing the measures that are needed to ensure that the stock exchange operations comply with the applicable provisions, thus promoting the development of the stock market in Mexico.

Centre Testing International Group Co. Ltd. Class A

CENTRE TESTING INTERNATIONAL GROUP CO., LTD., formerly CENTRE TESTING INTERNATIONAL (SHENZHEN) CO., LTD., is a China-based company principally engaged in the provision of technical testing services in trading goods, consumer goods, industrial goods and life science areas. The Company mainly provides hazardous substance testing, safety inspection, Electro Magnetic Compatibility (EMC) testing, environment security testing, reliability and failure analysis of electrical and electronic products, material reliability and failure analysis, metal and non-metallic materials analysis, testing for textiles, shoes and leather, toy testing, construction material and light industrial product testing and vehicle and spare parts testing, among others. The Company operates its business in domestic and overseas markets.

Cerved Group SpA

Cerved Group SpA is an Italy-based company engaged in the professional information services industry. The Company provides financial information for corporate and financial institutions. The Company's business activities are divided into three segments. The Credit Information segment offers business information products and services, real estate information, public credit rating and analytics services, as well as consumer credit information. The Marketing Solution segment provides analysis and economic information, based on which, clients are able to develop businesses, gain customers and calculate sales network. The Credit Management segment focuses on services to assess and manage non-performing loans and other impaired assets for third parties, including investment funds, banks and other financial enterprises. Furthermore, Cerved Information Solutions SpA is a parent of the Cerved Group. It operates through Fox & Parker Srl and Credit Management Srl.

Chongqing Zhifei Biological Products Co. Ltd. Class A

Chongqing Zhifei Biological Products Co., Ltd. is a China-based company principally engaged in the research, development, production, sale and distribution of vaccine products. The Company's main products include bacterial vaccines for the prevention of meningitis and pneumonia-based bacteria, biological products for the prevision and treatment of tuberculosis, viral vaccines for the prevention of rabies virus, influenza virus and other virus, general drugs and other biological products, among others. The Company is also involved in the agency sale of vaccines. The Company distributes its products in domestic market and to overseas markets, with Central China as its main market.

Cleanaway Waste Management Ltd.

Cleanaway Waste Management is focused on the following segments: Solids, which comprises the collection, treatment, recycle and disposal of all types of solid waste streams, including general waste, recyclables, construction and demolition waste and medical and washroom services; as well as Liquids and Industrial Services, which comprises the collection, treatment, processing and recycling of liquid and hazardous waste, including industrial waste, grease trap waste, oily waters and used mineral and cooking oils in packaged and bulk forms for resale, disposal and to produce fuel oils and base oils, as well as services including industrial cleaning, vacuum tanker loading, site remediation.

Cranswick plc

Cranswick is a supplier of food products. Co. engaged in the manufacturing and supplying of food products to U.K. grocery retailers, the food service sector and other U.K. and global food producers. Co. produces a range of products including fresh pork, convenience, gourmet products and poultry. Co.'s products include: Fresh & Added Value Pork; Traditional Air-Dried Bacon & Gammon; Sausages & Burgers; Handmade Pastry; Cooked Meats; Continental Products; Fresh Chicken; and Premium Cooked Poultry. As of Mar 31 2017, Co. had 15 manufacturing locations in the U.K.

Credit Corp Group

Credit Corp Group is engaged in debt purchase and collection as well as consumer lending. Co.'s segments are comprised of: debt ledger purchasing, which is comprised of purchases of consumer debts at a discount to their face value from credit providers with the objective of recovering amounts in excess of the purchase price over the collection life cycle of the receivables; and Consumer lending, which provides various financial products to credit-impaired consumers.

Dabur India Limited

Dabur India is engaged in manufacturing, marketing and distributing consumer goods and its related products. Co.'s products include hair care, oral care, health supplements, digestives and candies, baby and skin care, fruit juices, cooking pastes and sauces. Co.'s brand names include Dabur, Asavs, Classicals, Dabur Shilajit, Naturecare, Shankhpushpi, Honitus and Ring Ring. Co. operates three business divisions: Consumer Care Division, Consumer Healthcare Division and the wholly owned subsidiary, Dabur Foods Limited.

Deutsche Boerse AG

Deutsche Boerse is a financial services provider. Co.'s segments include Eurex, which comprises areas such as T7 electronic derivatives market trading platform, T7 electronic options trading platform, and Eurex Repo® over-the-counter trading platform; Xetra, which comprises areas such as cash market, the Specialist trading, and Eurex Bonds® OTC trading platform. Clearstream, which comprises custody and settlement services, securities financing services and collateral management, and investment funds services; and Market Data + Services, which comprises areas such as Distribution of licenses for real-time trading and market signals, and development and sales of indices.

Experian PLC

Experian is an information services group. Co. has four businesses: Credit Services, which collects data to analyze the credit histories of people and businesses, sorting through information about the credit they applied for and how they repaid the credit; Decision Analytics, which combines Co.'s data with data from its clients and third parties, and uses software and analytics to access, organize and analyze this data to help its clients to minimize the risk of fraud; Marketing Services, which helps Co.'s clients to plan, build and deliver their marketing campaigns; and Consumer Services, which, among others, monitors the information in people's credit reports for suspected fraud patterns.

Greentown Service Group Co. Ltd.

Greentown Service Group Co Ltd is a China-based company and mainly engaged in residential property management service. The main segments of the Company include Property Management Services, Property Consulting Services and Community Value-added Services. Property Management Services include security, cleaning, gardening, and repair and maintenance services. Property Consulting Services include consulting services to real estate developers and local property management companies to address various needs that arise during each major stage throughout the course of their property development projects and capitalizing on brand equity and expertise. Community Value-added Services mean that the Company provides property owners and residents of managed communities with access to an extensive array of daily necessities complemented by a wide assortment of life-style products and services through multiple channels.

HomeServe plc

HomeServe provides home repair and improvement services under its brand, HomeServe. Co. has partnerships with global brands that are relevant to Co.'s home assistance and improvement products. Co.'s partnerships include utilities, heating manufacturers and specialist service providers. Co.'s home assistance products are underwritten by third party underwriters, independent of HomeServe. Co. provides water, heating and electrical-related home assistance and repair products. Co.'s segments are: the U.K.; North America, France, Spain; and New Markets. The New Markets segment comprises Co.'s business in Italy, investment in digital initiatives, together with international development.

IDP Education

IDP Education is engaged in providing international student placement, English language testing and English language teaching services. Co.'s principal activities were placement of international students into education institutions in Australia, UK, USA, Canada and New Zealand, where services include counseling, application processing and pre-departure guidance, distribution and administration of International English Language Testing System tests and operating English language schools in Vietnam, Cambodia and Thailand.

IR Japan Holdings

IR Japan Holdings Ltd is engaged in the operation and management of subsidiaries and the provision of other related business. The Company's subsidiaries mainly provide consulting service, specialized in investor relations (IR) and shareholder relations (SR) services.

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.

London Stock Exchange Group plc

London Stock Exchange Group is a global markets infrastructure business based in the United Kingdom. Co's operating segments include: Information Services, which provides a range of information and data products including indexes and benchmarks; Post Trade Services LCH, which provides clearing services through which counterparty risk is mitigated across multiple asset classes; Capital Markets, provides access to capital for domestic and international businesses and electronic platforms for secondary market trading of equities, bonds and derivatives; and Group Technology, which provides secure technologies to customers that require performance at high levels of availability and throughput.

Longfor Group Holdings Ltd.

Longfor Properties Co. is an investment holding company. Through its subsidiaries, Co. is principally engaged in the property development, property investment and property management businesses in the People's Republic of China. Co. has three segments: property development, which develops and sells office premises, commercial and residential properties; property investment, which leases investment properties, which are developed by Co. to generate rental income and to gain from the appreciation in the properties' values in the long term; and property management and related services, which mainly represents the income generated from property management.

Morneau Shepell

Morneau Sobeco Income Fund is an unincorporated, open-ended, limited purpose trust. Co. is a Canadian-owned firm providing human resource consulting and outsourcing services, delivering solutions to assist employers in managing the financial security, health and productivity of their employees. Co. offers its services to organizations that are situated in Canada, in the United States and around the globe.

NATIXIS

Natixis is a player in the European banking industry. As the banking partner of large companies in France, Co. also plays an active role in serving financial institutions (banks, insurance companies, pension funds, etc.). Co.'s activities are divided into in three main business lines: Wholesale Banking, Investment Solutions (Asset Management, Private Banking, Insurance, and Private Equity) and Specialized Financial Services. Co. operates in four geographical regions: France; other EU countries; North America (Canada, USA); and other OECD countries. As of Dec. 31 2013 Co.'s total assets totaled Euro510,131,000,000.

Nissin Foods Holdings Co. Ltd.

Nissin Foods Holdings is a holding company. Through its affiliates, Co. is mainly engaged in the manufacture and sale of instant noodles and other food products in Japan and overseas. Co. manufactures cup and bag-type instant noodles under the names of "Chicken Ramen," "Cup Noodle," "Nissin-no-Donbei," "Demae Iccho," "Myojo Charumera, " "Myojo Ippeichan," and others. Co. also manufactures chilled and frozen food products including ramen noodles, yakisoba noodles, pasta, snacks, and cooked rice. In addition, Co., through its affiliates, is engaged in the manufacture and sale of confectionery and dairy products, the real estate business, and the operation of restaurants and golf courses.

Nomura Research Institute Ltd.

Nomura Research Institute is mainly engaged in the provision of consulting, financial and industrial IT services, and IT platform services. Consulting Services segment offers management consulting and system consulting services. Financial IT Solutions segment provides IT services including system development, operation outsourcing, and shared-online services for securities, insurance, banking, and other financial industries. Industrial IT Solutions segment provides IT services for distribution, manufacturing, service, and healthcare industries. IT Platform Services segment offers IT infrastructure services, managed services, and advanced information technology services.

People

People is engaged in delivering employee group benefit consulting, pension consulting and third party benefits administration services, as well as, recruiting services, strategic human resource (HR) consulting and career management services to help companies recruit, retain and reward employees.

Real Matters

Real Matters is engaged in network management services provider for the mortgage lending and insurance industries. Co.s' platform combines its proprietary technology and network management capabilities with field agents to create an efficient marketplace for the provision of mortgage lending and insurance industry services. Clients include mortgage lenders in the United State and some insurance companies in North America. Co. is a independent provider of residential real estate appraisals to the mortgage market and a independent provider of title and mortgage closing services in the United States.

Rentokil Initial plc

Rentokil Initial is a holding company. Through its subsidiaries, Co. provides services that include pest control, hygiene and workwear, as well as a range of other services including plants, medical services, property care and hygiene. Co.'s businesses include: Pest Control, which consists of Rentokil Pest Control, a commercial pest control company; Hygiene, which consists of Initial Hygiene, a hygiene services company; Workwear, which consists of Initial Workwear, a provider of workwear services across the four main continental European markets of France, Germany, Belgium and the Netherlands; and Other, which consists of Ambius, an interior landscaping business.

SEGRO plc

Segro owns, develops, and manages warehouse properties in selected markets in the U.K. and Continental Europe. Co.'s reportable segments are the geographical business units, Greater London, Thames Valley and National Logistics, Northern Europe (principally Germany), Southern Europe (principally France) and Central Europe (principally Poland).

STADA Arzneimittel AG

Stada Arzneimittel is engaged in the development and marketing of products with off-patent active pharmaceutical ingredients in the health care and, in particular, in the pharmaceutical market. Generics is based on low pricing and/or a cross-product and cross-indication marketing concept while Branded Products focus on the specific product characteristics and, in particular, on the brand name of individual products. Co.'s business activities are divided into the four market regions of Germany, Central Europe, CIS / Eastern Europe and Asia & Pacific & Middle East / North Africa (MENA).

Standard Foods Corporation

Standard Foods is engaged in manufacturing and selling nutrition foods, cooking oil and dairy food and beverage. Co.'s products included baby milk powder and nutritional supplements, bottle baby food, oat products, low-fat, skim and functional series milk powder, and healthcare products. Through its subsidiaries, Co. is also engaged in manufacturing and selling computer peripheral equipment and computer information products.

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.

Teleperformance SE

Teleperformance is engaged in outsourced customer experience management. Co. delivers integrated solutions to corporations and administrative bodies worldwide to manage all aspects of the customer-relations cycle on their behalf. Co.'s activities include four core business areas: customer care (these are services provided as part of customer service management); technical support; debt collection; and business information and marketing actions. As of Dec. 31, 2013, Co. had approximately 110,000 computerized workstations across 46 countries. Co.'s client includes industries like Telecoms, Internet, Financial services, Technology/media, Insurance, Government sector and Utilities.

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.

Transcontinental Inc. Cl A

Transcontinental conducts business in Canada and the U.S. in two sectors: Printing and Packaging Sector and Media Sector. Co.'s printing sector provide print solutions in retail flyers, magazines, newspapers and color books, as well as personalized and mass marketing products, while Co.'s packaging sector provides a range of packaging products and premedia services in many markets, including the food product and beverage industries. Co.'s media sector provides media and marketing solutions, which include printing and digital publishing products in French and English: newspapers, educational books, consumer magazines, trade publications, and retail promotional content, among others.

Waste Connections Inc.

Waste Connections is a solid waste services company in North America, providing waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets in the U.S. and Canada. Through its R360 Environmental Solutions subsidiary, Co. is also a provider of non-hazardous exploration and production (E&P), waste treatment, recovery and disposal services in several of the natural resource producing areas in the U.S. Co. also provides intermodal services for the rail haul movement of cargo and solid waste containers in the Pacific Northwest through a network of intermodal facilities.

Xero Limited

Xero is engaged in the provision of a platform for online accounting and business services to small businesses.

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

Other Reports on these Companies
Other Reports from Vermilion Research

ResearchPool Subscriptions

Get the most out of your insights

Get in touch