Report
Dave Nicoski ...
  • Ross LaDuke
EUR 235.08 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Breakout probability on the rise

The probability for a breakout for global equities (MSCI ACWI) has increased in the past week based on several positive technical developments which we highlight below. Still, there are several indicators that continue to tell us we are not yet out of the woods.

• Emerging Markets. The MSCI EM index exhibits bullish price and RS reversals -- add exposure/market weight. This is a major positive for both EM and global equities as it is a characteristic consistent with global bull markets and signals a significant improvement in investors' risk appetites... see chart below.

• Copper. Copper prices exhibit a bullish reversal topside a 6-month downtrend, giving us hope that the important industrial metal may be bottoming. We view this bullish reversal as a sign that global growth could be on the upswing. Two actionable ideas that we view as attractive bottom-fishing candidates include Southern Copper (SCCO-US) and Aurubis AG (NDA-DE)... see page 3.

• European & UK Banks, Major Autos. EU/UK banks and major auto manufacturers exhibit bullish price and RS reversals, giving us hope that they could be bottoming. Bottoms in cyclical value areas of the market such as these are essential to a healthy bull market... see page 4.

• Actionable Theme: Autos & Parts. Recommendations within this automobile-themed section hail from our Consumer Discretionary and Manufacturing Sectors, and all but two are domiciled in Japan. We cover attractive opportunities within major autos, auto parts, and tires/rubber... see page 5.

• Actionable Theme: Financials. Groups highlighted include Banks, Exchanges/Markets, Asset Managers, and Insurance.... see page 6.

• Actionable Theme: Communications. Price and RS bottoms in the STOXX 600 Telecom index is one sign that playing defense is still a viable strategy... see page 7.
Underlyings
ANIMA Holding S.p.A.

Anima Holding is a holding company. Through it's wholly-owned subsidaries, Co. is engaged in the provision of asset management services in Italy through a network of distributors under more than 130 commercial agreements. Co. is active in the formation, development, promotion and management of financial products under the Anima brand, as well as the provision of individual portfolio management services to retail and institutional customers. Co. outsources a number of services to contractors. These include a number of back-office activities for collective investment undertakings (CIUs), including the pension fund, and the main individual portfolio management positions.

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.

Bank of Nova Scotia

Scotiabank is a financial services provider in North America, Latin America, the Caribbean and Central America, and parts of Asia. Through its three operating segments: Canadian Banking, International Banking, and Global Banking and Markets, Co. provides a range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. As of Oct 31 2017, Co. had total assets of C$915,273 million and total deposits of C$625,367 million.

Barclays PLC

Barclays is a holding company. Through its subsidiaries, Co. is a financial services provider engaged in retail banking, credit cards, wholesale banking, investment banking, wealth management and investment management services. Co.'s business segments are: Barclays U.K, which provides everyday products and services to retail customers and small to medium sized enterprises; Barclays International, which delivers products and services designed for Co.'s corporate, wholesale and international banking clients; and Head Office, which comprises head office and central support functions (including treasury) and businesses in transition.

Concordia Financial Group Ltd.

Concordia Financial Group is a commercial banking group mainly based in Tokyo and Kanagawa Prefectures with total assets of Y18,739,930 million as of Mar 31 2017. Co. is principally engaged in the operation of management business and related business through its bank subsidiaries. Through its subsidiaries, The Bank of Yokohama. and its group companies, as well as The Higashi-Nippon Bank and its group companies, Co. is engaged in operation of banking business, as well as leasing, financial products trading business, information services and research work, venture capital business and other financial services.

CRH Plc

CRH is a diversified international building materials company. Co. is engaged in the manufacture and distribution of a range of building materials products from the fundamentals of heavy materials and elements to construct the frame, through value-added products that complete the building envelope, to distribution channels which service construction fit-out and renewal. Co. operates seven operating segments: Europe Heavyside, Europe Lightside, Europe Distribution, Americas Materials, Americas Products, Americas Distribution and Asia.

DENSO CORPORATION

Denso and its affiliates are mainly engaged in the manufacture and sale of automobile electronic, electrical parts, and other components. Co.'s principal business segments are powertrain control systems, electronic systems, thermal systems, information and safety systems, small motors, industrial systems and consumer products. Co.'s principal products include starters, alternators, engine management systems, components for gasoline, diesel and electric hybrid vehicles, engine ECUs, hybrid ICs, air conditioners, radiators, remote keyless entry controllers, car navigation systems, car-mounted ETC devices, motors, bar code handy scanners and industrial robots.

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.

Hazama Ando Corp.

Hazama Ando is engaged in the construction business. Co is engaged in the provision of civil engineering services and building construction contracts including survey, planning, designing, execution, supervising, technical support and consulting services. Co.'s contract works include office buildings, production and distribution facilities, medical and welfare facilities, educational and research facilities, dams, water/sewer systems, tunnels and roads, bridges and airports in Japan and overseas. Co. is also engaged in the sale and leasing of construction materials, the design and construction of single-family houses, as well as the purchase, sale, leasing and brokerage of real estate.

Ichikoh Industries Ltd.

Ichikoh Industries and its affiliates are mainly engaged in the manufacture and sale of automobile parts, including lamps, rear-view mirrors, wipers and others. Co.'s principal business segments are automobile parts and supplies. Co.'s principal products include headlamps, fog lamps, front turn signal lamps, tail lamps, backup lamps, license lamps, side flasher lamps, parking lamps, interior lamps and speed indicator lamps, exterior mirrors, interior mirrors, bulbs, wipers, wiper blades and arms (high-speed blade and winter blade), ashtrays, wheel covers, radiator grilles, ornaments, switches and reflectors. Co. is also engaged in the manufacture and sale of light bulbs for automobiles.

Investor AB A

Kingspan Group Plc

Kingspan is a holding company, engaged in the provision of low energy building solutions. Co.'s operating segments include: Insulated Panels, which is engaged in the manufacture of insulated panels, structural framing and metal facades; Insulation Boards, which is engaged in the manufacture of rigid insulation boards, building services insulation and engineered timber systems; Environmental, which is engaged in the manufacture of environmental, pollution control and renewable energy solutions; and Access Floors, which is engaged in the manufacture of raised access floors.

Kyudenko Corporation

Kyudenko is mainly engaged in the provision of facilities engineering services. Co. is engaged in the design and construction work of electrical works including power distribution lines, interior wiring and electrical communications works; HVAC and plumbing works; and the inspection and maintenance of facilities and equipment. In addition, Co. is engaged in the sale of materials and equipment for HVAC facilities works; the provision of real estate sales, lease and management; software development; environmental analysis and measurement; renewable energy business; temporary staffing services; medical-related business; nursing care business; and the operation of golf courses.

Maruti Suzuki India Limited

Maruti Suzuki India is engaged in manufacturing, purchasing, and selling motor vehicles, components, and spare parts in India, Europe, Africa, Asia, Oceania, and Latin America. Co. offers 14 brands and approximately 150 variants of passenger cars, multi utility vehicles, and multi-purpose vehicles under the Alto 800, Alto K10, Wagon R, Celerio, StingRay, Ritz, Swift, DZire, SX4, Ertiga, Omni, Eeco, Gypsy, and Grand Vitara brands. Co. is involved in the facilitation of pre-owned car sales, fleet management, and car financing. In addition, it provides motor insurance products, accessories, auto card, and driving school services.

Mitani Sekisan

Mitani Sekisan is mainly engaged in the manufacture and sale of construction materials. Along with its subsidiaries, Co. operates in three business segments. Secondary Concrete Products segment offers concrete piles, concrete poles, concrete blocks, and gravels. Information-related segment is engaged in the provision of system development, as well as the sale of hardware and software of computer systems. Others segment is involved in the manufacture and sale of gravel products and construction materials; the leisure business; the leasing of real estate and mold forms of wave-dissipating blocks; and the establishment of information systems.

Mitsubishi UFJ Financial Group Inc.

Mitsubishi UFJ Financial Group is financial groups with total assets of Y297,185,019 million as of Mar. 31, 2017. Co. is the holding company for The Bank of Tokyo-Mitsubishi UFJ, Ltd., Mitsubishi UFJ Trust and Banking Corporation, Mitsubishi UFJ Securities Holdings Co., Ltd., Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Mitsubishi UFJ NICOS Co., Ltd., and other companies. As a bank holding company, Co. is regulated under the Banking Law of Japan. Its services include commercial banking, trust banking, securities, credit cards, consumer finance, asset management, leasing and many more fields of financial services.

National Australia Bank Limited

National Australia Bank provides banking services, credit and access card facilities, leasing, housing and general finance, international banking, investment banking, wealth management, funds management, life insurance and custodian, trustee and nominee services. Co.'s division include: Australian Banking, which provides products and services to retail and business customers; National Australia Bank Limited Wealth, which provides superannuation, investment and insurance solutions; and New Zealand Banking, which comprises the Retail, Business, Agribusiness, Corporate and Institutional and Insurance franchises in New Zealand. As of Sept 30 2016, Co. had total assets of A$777.62 billion.

National Bank of Canada

National Bank of Canada is a provider of financial services that include banking and investment solutions for individuals and businesses as well as securities brokerage, insurance and wealth management services. Co. operates in three business segments: Personal and Commercial, which encompasses the banking, financing, and investing services; Wealth Management, which comprises investment solutions, trust services, banking services, lending services and other wealth management solutions; and Financial Markets, which encompasses banking services, investment banking services and financial solutions. At Oct 31 2017, Co. had total assets of C$245.83 billion and total deposits of C$156.67 billion.

Nissin Kogyo Co. Ltd.

Nissin Kogyo is mainly engaged in the installation of brakes for two and four wheeled vehicles as well as the development, manufacture, and sale of aluminum. Co.'s principal products are vehicle stability assists systems, anti-lock braking systems, disc brakes, drum brakes, engine mount brackets, master cylinder and master power, aluminum knuckles, and others; and anti-lock braking systems, disc brakes, drum brakes, brake master cylinders, clutch master cylinders, and others. In addition, Co. is engaged in the manufacture sale of machinery, metal molds, aluminum components, cutting instruments, and others.

Reinet Investments S.C.A.

Reinet Investment is a regulated securitization vehicle engaged in long-term capital growth investments. Co. allows its shareholders to participate indirectly in the portfolio of assets held by its wholly owned subsidiary Reinet Fund SCA FIS, a specialized investment fund also incorporated in Luxembourg.

Shimizu Corporation

Shimizu is a general contractor engaged in the provision of construction and engineering works at domestic and overseas. Construction segment is engaged in the construction and civil engineering works of office buildings, educational facilities, medical and welfare facilities, production and logistics facilities, residential buildings, commercial facilities, recreational facilities, as well as roads, tunnels and other transportation facilities, energy-related facilities, waste disposal sites, urban development projects, and disaster-prevention and conservation projects. Real Estate segment is engaged in the real estate development, leasing and sales.

Shin Kong Financial Holding Co. Ltd.

Shin Kong is a financial holding company based in Taiwan. Co. principal activity is the provision of a full range of financial products and services through its subsidiaries in life insurance, banking, securities, asset management and non-life insurance brokerage. Co.'s core businesses are insurance and banking and with focus on strict risk management and financial planning. Co. delivers these products through a distribution network which includes 366 outlets of Shin Kong Life Insurance Co., Ltd. (SKL), 108 branches of Taiwan Shin Kong Commercial Bank Co., Ltd. (SKB), and 7 outlets of Shin Kong Securities Co., Ltd. (SKSC) to 5 million customers.

Showa Corporation

Showa and its subsidiaries and affiliates are engaged in the manufacture and sale of automotive and motorcycle components, drive train products for automobiles and motorcycles, as well as components for outboard marine engines. Co.'s principal business segments are motorcycle products, automotive products, steering, gas springs and others. Co.'s principal products include shock absorbers, steering systems, differential gears, propeller shafts, gas springs, CVT pumps, front forks, rear cushions, drive train systems, and power tilt and trim. Co. operates its business in Japan as well as overseas including the U.S., Canada, Brazil, China, Indonesia, Thailand and India.

Stabilus SA

Stabilus SA, formerly Servus HoldCo SARL is a Luxembourg-based company. The Company is the automotive and industrial supplier. It develops and produces electromechanical drives, gas springs and dampers. Its products in the automotive segment are used in a broad range of applications such as tailgates, hoods, doors and convertible tops. In addition, Stabilus SA supplies industrial customers, for example in medical and rehab technology (operating tables, hospital beds, wheelchairs), transportation and traffic (flaps and lids for luggage, loading and maintenance), furniture (cabinet lids, beds, tables) and house and building technology (skylights, smoke exhaust vents, awnings).

SUBARU CORP

SUBARU and its affiliates are mainly engaged in the manufacture and sale of automobiles and aerospace-related equipment. The Automobiles segment is engaged in the manufacture, sale and repair of passenger cars and their components under the name of "SUBARU." The Aerospace segment is engaged in the manufacture, sale and repair of commercial and defense aircrafts, helicopters, unmanned aerial vehicles and their components. In addition, Co. is engaged in the manufacture, sale and repair of generators, engine-equipped machinery, agricultural machinery, construction machinery and their components; the leasing of real estate; and the manufacture and sale of temporary houses.

Sumitomo Rubber Industries Ltd.

Sumitomo Rubber Industries is a tire and rubber manufacturer. Along with its affiliates, Co. is engaged in the manufacture and sale of tires and tubes for passenger cars, construction vehicles, agricultural vehicles, race and rally cars, motorcycles, and new transportation system; golf and tennis goods; and industrial and other products, such as artificial turf, precision rubber parts for information technology equipment, dock fenders, high damping rubber, flooring materials, flexible rubber joints, marine-pollution preventive screens, rubber hoses, rubber gloves and medical rubber stoppers. Co. is also engaged in the operation of golf tournaments, golf and tennis schools, and golf courses.

Suzuki Motor Corp.

Suzuki Motor is engaged in the manufacture and sale of automobiles and motorcycles in Japan and overseas. Co.'s business segments are automobiles, motorcycles, and marine. Automobiles segment manufactures and sells light automobiles, compact automobiles and general automobiles including "Swift," "Solio," "Jimny," "Spacia," and "Hustler." Motorcycles segment manufactures and sells compact two-wheel vehicles, light two-wheel vehicles, motorized bicycles and buggies such as "Hayabusa," "GSX-R1000R ABS," and "Skywave." Specialized Machinery segment manufactures and sells outboard motors, engines for snow vehicles, motorized wheelchairs, among others.

Toyota Industries Corp.

Toyota Industries is mainly engaged in the manufacture and sale of automobiles, industrial vehicles and textile machinery, as well as logistics business. Co. operates in three business segments: automobile, industrial vehicle and textile machinery. The Automobile segment manufactures and sells automobiles, engines and compressors for automotive air-conditioners, foundry pieces and electronic equipment. The Industrial Vehicle segment provides forklift trucks, warehouse equipment, automatic warehouse, vehicles for high-place work. The Textile Machinery segment offers weaving machines and spinning machines, as well as yarn quality measurement equipment and cotton grading equipment.

Toyota Motor Corp.

Toyota Motor is an automobile manufacturer. Co. is primarily engaged in the design, manufacture, and sale of sedans, minivans, compact cars, sport-utility vehicles, trucks and related parts and accessories throughout the world. Co. provides financing, vehicle and equipment leasing and certain other financial services primarily to its dealers and their customers to support the sales of vehicles and other products manufactured by Co. Co.'s principal business segments are automotive operations, financial services operations and other operations. Co. sells its vehicles in approximately 190 countries and regions, and markets for its automobiles in Japan, North America, Europe and Asia.

Volkswagen AG

Voltas Ltd.

Voltas is an air conditioning company based in India. Co. offers engineering solutions for industries in areas such as heating, ventilation and air conditioning, refrigeration, electro-mechanical projects, textile machinery, mining and construction equipment, water management & treatment, cold chain solutions, building management systems, and indoor air quality. Co. is principally active in the management and execution of electro-mechanical projects and the installation and servicing of diverse technology-based systems. Co.'s operations are organized along three business segments: Electro-Mechanical Projects & Services; Engineering Products & Services; and Unitary Cooling Products.

Westpac Banking Corporation

Westpac Banking is a banking organization with branches, affiliates and controlled entities throughout Australia, New Zealand, Asia and in the Pacific region. Co. provides a range of banking and financial services in these markets, including consumer, business and institutional banking and wealth management services. Co. is engaged in the provision of financial services including lending, deposit taking, payments services, investment portfolio management and advice, superannuation and funds management, insurance services, leasing finance, general finance, interest rate risk management and foreign exchange services. As of Sep 30 2017, Co. had total assets of A$851,875,000,000.

WSP Global Inc.

WSP Global is engaged in offering consulting services ranging from planning to execution, including conceptual and development studies, feasibility and economic studies, preliminary engineering and detailed design, plans and specifications, work supervision, environmental planning and projects and construction management. Co. operates in two geographic segment, Canada and International (Trinidad and Tobago and other countries). Through its subsidiaries, Co. operates in five industries: building, municipal infrastructure, industrial and energy, transportation and environment.

Yamaha Motor Co. Ltd.

Yamaha Motor is a manufacturing company. Along with its affiliates, Co. operates in four business segments: motorcycles, marine products, power products, industrial machinery and robots. Co. is engaged in the manufacture and sale of motorcycles, knockdown parts for overseas production, outboard motors, personal watercraft, FRP pools, fishing boats, utility boats, all-terrain vehicles, recreational off-highway vehicles, snowmobiles, golf cars, generators, small-sized snow throwers, multi-purpose engines, surface mounters, industrial robots, wheelchair electric power units, automobile engines, automobile components, electrically power assisted bicycles and industrial-use unmanned helicopters.

Yokohama Rubber Co. Ltd.

Yokohama Rubber is mainly engaged in the manufacture and sale of vehicle tires and other rubber products. Co.'s primary products include tires for passenger cars, trucks and buses, light trucks, mining and construction equipment and industrial vehicles, aluminum alloy wheels and automobile-related components; industrial products, such as conveyor belts, rubber plates, various hoses, marine fenders, oil spill containment booms, marine hoses, rubber molded products, air springs, highway joints, rubber support, adhesives and sealants; aerospace products and sports products. Co., through its subsidiaries, is also engaged in the provision of data processing and real estate services.

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