Report
Dave Nicoski ...
  • Ross LaDuke
EUR 239.73 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Global indexes approaching major resistance

Broad global indexes are bumping up against logical downtrend resistance. As a result, our outlook remains cautious and our baseline expectation for continued downward pressure on global equities remains intact. At the same time, we are seeing signs that the worst of the declines may be behind us as global cyclical Sectors show RS improvements while defensive Sectors display early signs of RS deterioration.

• Regional/Country Overview. The U.S., Europe, and Japan all remain in downtrends from a price perspective, though major resistance levels are being tested. Aided by some deterioration in the U.S. dollar, emerging markets remain leadership -- stay overweight. Today we highlight a number of actionable Chinese ADRs in addition to the many EM stocks listed on local exchanges... see pages 2-4.

• Actionable Sectors & Industries. Communication Services is one global Sector with a combination of defensive and offensive attributes that exhibits improving relative strength. In a similar vein, the telecom equipment industry offers a defensive way to play the Technology Sector... see pages 5-12.
Underlyings
Apt Satellite

APT Satellite Holdings Ltd is an investment holding company principally engaged in the provision of satellite transponder capacity services. The Company also provides satellite based broadcasting and telecommunications services and other satellite related service. The Company's services also include providing transponder leasing services, broadcast services and teleport & network services. In addition, the Company also provides data center services as well as television channel distribution services.

Beijing Bewinner Communications (A)

Beijing Bewinner Communications is engaged in the provision of telecommunications value-added services. Co. provides wireless value-added services (WVAS) to terminal users of domestic telecommunications operators. Co.'s services include short messages, interactive voice response (IVR), caller ringtones, multimedia messages and wireless application protocol (WAP). Co. is also engaged in the mobile data transmission system integration operations.

China Mobile Limited

China Mobile and its subsidiaries are engaged in the provision of mobile telecommunications and related services principally using the Global System for Mobile Communications standard and the Time Division Synchronous Code Division Multiple Access standard. In addition, Co. provides its customers with internet access through wireless local area networks. Co. also develops and carries its 4G business based on the TDD mode long-term evolution technology. As of Dec 31 2013, Co. had approx. 767,200,000 customers in all 31 provinces, autonomous regions and directly-administered municipalities in the People's Republic of China as well as in Hong Kong.

China Spacesat Co. Ltd. Class A

China Spacesat is engaged in the research, design, manufacture and sale of satellites and its related products; provision of satellite application technology and integrated information services; assembly of computer systems, development of software products; investment and operation of tourism projects; related technical exchange and training; and provision of information consultation services. Through its subsidiaries, Co. is also engaged in cableway passenger transport; tourism chute; guest room services; satellite engineering; organization of cultural and artistic exchanges; technical development of medical equipment and system, and mechanical and electrical products.

China Telecom Corp. Ltd. Class H

China Telecom is a full services integrated information service operator and wireline telecommunications and broadband services provider in the People's Republic of China. Co. offers wireline and mobile telecommunications services including wireline voice, mobile voice, internet, managed data and leased line, value-added telecommunications services, integrated information application services and other related services. As of Dec 31 2010, Co. had wireline access lines in service of approximately 175 million, wireline broadband subscribers of approximately 63 million and mobile subscribers of approximately 90 million.

Citic Telecom International Holdings

CITIC Telecom International Holdings is an investment holding company. Through its subsidiaries, Co. is primarily engaged in the provision of financial and operational support; the provision of telecommunications leasing and technology services; the provision of telecommunications consultancy services; the provision of content services to licensed telecoms operators; the provision of systems integration services; the provision of systems integration and maintenance services; property investment and equipment holding. As of Dec 31 2011, Co. conducted its operations through the following segments: voice services, short message services and other telecommunications services.

Datang Telecom Technology (A)

Datang Telecom Technology is engaged in electronic and communication equipment, instrument and meter, cultural office equipment, computer software and hardware, and system integration; technology development, transfer, manufacture and sale of optical cable and micro-electronic device; design of communication and information system engineering; export of numerical program control exchanger, communication transmission equipment, communication cut-over equipment, communication software, communication terminal equipment, mobile, cordless telephone, IP phone and network adaptor; production and sale of safe guard products; and involved in entrepot trade and counter trade.

Deutsche Telekom AG

Deutsche Telekom is engaged in the telecommunications services and information technology sectors. Co. operates as an integrated telecommunications provider. It is organized into four operating segments: Germany, Europe, and the United States; and Systems Solutions, as well as Group Headquarters and Shared Services. Co. provides fixed-network lines, broadband lines and mobile communications. Co. also provides customized Information and Communication Technology (ICT) solutions for corporate customers under the T-Systems brand. The Group Headquarters and Shared Services segment comprises cross-segment management functions, real estate services, and mobility solutions, among others.

Globe Telecom Inc.

Globe Telecom is a provider of telecommunications services. Co. operates mobile, fixed line and broadband networks, providing communications services to individual customers, small and medium-sized businesses, and corporate and enterprise clients. Co.'s business segments consist of: mobile communications services, which consists of digital cellular telecommunications services; and wireline communications services, which consists of fixed line telecommunications services. As of Dec 31 2014, Co. had about 44.0 million mobile subscribers, over 2.8 million broadband customers, and over 762,000 landline subscribers.

Gohigh Data Networks Technology (A) (SC SZ)

GoHigh Data Networks Technology is engaged in broadband technology development, transfer, consultation, services, manufacture and sale of telecommunications network products, communication equipment, terminal communication equipment, instrument and appearance, computer software, computer peripheral equipment and system integration; communication and information systems engineering design; information services; and self-run and as an agent for the import and export of all sorts of products and technology. Through its subsidiaries, Co. is also engaged in wholesale of diesel oil, lubricant and textile; sale system integration, technology and information services of fuel oil and petroleum.

Huazhu Group Ltd. Sponsored ADR

Magyar Telekom Telecommunications

Magyar Telekom is engaged in the providing fixed line and mobile telecommunication services for public and business customers. Co. provides voice and non-voice (SMS, MMS, internet, data and content provision) within mobile services; voice, data, internet and TV services within fixed line services. In addition, Co. sells equipment needed for using fixed line and mobile services (telephones, tablets, notebooks, TV sets etc.).

NetEase Inc. Sponsored ADR

New Oriental Education & Technology Group Inc. Sponsored ADR

Nokia Oyj

Nokia is an Internet and communications technology company based in Finland. Co.'s operations are focused on three businesses: network infrastructure software, hardware and services, which Co. offers through Networks; location intelligence, which Co. provides through HERE; and advanced technology development and licensing, which Co. pursues through Technologies. Co. maintains a global presence with operations and Researh & Development facilities located in Europe, North America and Asia, and sales in approximately 130 countries. Co. has an installed base of around 600 customers worldwide and these operators serve over 4 billion subscribers.

Orange Polska S.A.

Orange Polska SA is a supplier of telecommunications services in Poland. Co. provides services, including fixed-line telecommunication services, Integrated Services Digital Network, voice mail, dial-up and fixed access to the Internet and Voice over Internet Protocol. Co. is one of Poland's three DCS 1800 and GSM 900 mobile telecommunications providers. Co. provides also third generation UMTS services. In addition, Co. provides leased lines, radio-communications and other telecommunications value added services, sells telecommunications equipment, produces electronic phone cards and provides data transmission, telephone directories, multimedia services and various Internet services.

PT Telkom Indonesia (Persero) Tbk Class B

P.T. Telekomunikasi Indonesia is a telecommunication service and network provision group based in Indonesia. Co. serves millions of customers throughout Indonesia with a complete range of telecommunications services that include fixed wireline and fixed wireless telephone connections, cellular services, network and interconnection services, as well as internet and data communication services. Co. also provides services in information, media and edutainment, including cloud-based and server-based managed services, e-Payment and IT enabler services, Pay TV, as well as e-Commerce and other portal services. Co. operations are organzied along four segments: Corporate, Home, Personal and others.

Rostelecom PJSC

Rostelecom PJSC provides communication services (including local, intra-zone, long-distance domestic and international fixed-line telephone services, mobile services), data transmission, Internet, Pay TV, VPN and data centers services, rent of communication channels and radio communication services in the territory of Russian Federation. Co. operates the main intercity network and the international telecommunications gateways of the Russian Federation, carrying voice and data traffic that originates in its own network and other national and international operators' networks to other national and international operators for termination.

Shenzhen Gongjin Electronics (A)

Shenzhen Gongjin Electronics Co Ltd. SHENZHEN GONGJIN ELECTRONICS CO.,LTD is a China-based company principally engaged in the manufacture of broadband communication terminals. The Company is primarily engaged in the research and development, manufacture and sales of broadband communication terminals to communication equipment suppliers. The Company primarily produces asymmetric digital subscriber line (ADSL) terminals, very high speed digital subscriber line (VDSL) terminals, optical access terminals, Wi-Fi terminals and 3G terminals, as well as other broadband communication terminals. The Company distributes its products within domestic market and to overseas market.

Spark New Zealand Limited

Spark New Zealand of New Zealand is the supplier of telecommunications and information, communication and technology (ICT) services in New Zealand and Australia. Co. provides telecommunications and ICT products and services, including local, national, international and telephone services; mobile services, data, broadband and internet services; information technology (IT) consulting, implementation and procurement, equipment sales; and installation services. The Co.'s portfolio of IT services include Cloud computing services, managed IT services, IT outsourcing, IT software and hardware procurement, and professional services to assist organizations with business and technology investments.

TAL Education Group Sponsored ADR Class A

Telefonica SA

Telefonica is engaged in the provision of public or private telecommunications services, including ancillary or complementary telecommunications services or related services. Co.'s fixed business includes: traditional fixed telecommunication services, Internet and broadband multimedia services, data and business-aplications services, and wholesale services for telecommunication operators. Co. also provides a range of mobile and related services and products to consumer and business customers, including mobile voice services, value added services, mobile data and Internet services, wholesale services, corporate services, roaming, fixed wireless, and, trunking and paging.

Telia Company AB

Telia Company provides telecommunication services in the Nordic and Baltic countries, the markets of Eurasia, including Russia, Turkey and Spain. Co. has three business segments: Mobility Services, which comprises operations in Sweden, Finland, Norway, Denmark, Lithuania, Latvia, Estonia and Spain; Broadband Services, which comprises operations in Sweden, Finland, Denmark, Lithuania, Latvia (49.0%), Estonia and international carrier operations; and Eurasia, which comprises mobile operations in Kazakhstan, Azerbaijan, Uzbekistan, Tajikistan, Georgia, Moldova and Nepal. The business area also includes Co.'s shareholdings in OAO MegaFon, Russia and Turkcell Iletisim Hizmetleri A.S., Turkey.

Tencent Holdings Ltd.

Tencent Holdings Limited is an investment holding company principally involved in the provision of value-added services (VAS) and online advertising services. The Company operates through three main segments. The VAS segment is mainly involved in provision of online/mobile games, community value-added services and applications across various Internet and mobile platforms. The Online Advertising segment is mainly engaged in display based and performance based advertisements. The Others segment is mainly involved in provision of payment related services, cloud services and other services.

TIM SA (Brazil)

TIM Participacoes is holding company. Through its subsidiaries in various telecommunications markets throughout Brazil, Co. operates mobile, fixed and long distance telephony, data transmission and ultra-broadband (speeds of more than 34 MB per second, or Mbps) services. Co. offers extensive data coverage throughout Brazil, with Co.'s general packet radio services technology, or GPRS, covering 100% of Co.'s coverage area and Co.'s EDGE technology reached almost 95% of Co.'s coverage area, in addition to Co.'s 3G and 4G network covering approximately 89% and 74%, respectively, of the urban population of Brazil.

TIME dotCom Bhd

TIME dotCom Berhad is principally engaged in investment holding, and provision of management and marketing/promotional services. The Company's segment is the business of telecommunications. The Company, through its subsidiaries, is engaged in provision of voice, data, video and image communication services through its domestic and international network; investment holding; the business of telecommunication services and trading bandwidth capacity; provision of management services; wholesale of telecommunication equipment and related services; provision of network services, information services, system integration services, and operation of data networks and network-based applications for corporations. Its subsidiaries include AIMS Data Centre Pte. Ltd., AIMS Cyberjaya Sdn. Bhd., The AIMS Asia Group Sdn. Bhd., Global Transit Limited, Global Transit (Hong Kong) Limited, TIME dotCom International Sdn. Bhd., Planet Tapir Sdn. Bhd. and TT dotCom Sdn. Bhd.

Tongyu Communication (A)

Tongyu Communication Inc. TONGYU COMMUNICATION INC. is a China-based company principally engaged in the research and development, manufacture and distribution of telecommunication antennas and radio frequency components. The Company's main products include substation antennas, radio frequency components and microwave antennas. The Company provides telecommunication antennas and radio frequency components, as well as integrated resolutions for mobile communication operators and equipment integrators. The Company distributes its products in domestic and overseas markets.

Turkcell Iletisim Hizmetleri A.S.

Turkcell Iletisim Hizmetleri is a provider of mobile services in Turkey. Co. provides mobile voice, internet and other services over its mobile communications network. Subscribers can choose between postpaid and prepaid services. Postpaid subscribers sign a subscription contract, and receive monthly bills for services, while prepaid subscribers must purchase a starter pack which consists of a SIM card and inclusive airtime. GSM offers a range of services that include voice, circuit switched data, packet data and fax, in addition to standard service offerings such as call barring, call forwarding, call waiting and roaming into areas serviced by other GSM carriers.

Wistron NeWeb Corp.

Wistron NeWeb and its subsidiaries are engaged in the research, development, production, and sale of wired communication equipment, wireless communication networking equipment, electronic components, regulated telecommunication radio frequency equipment, satellite communication systems, and mobile and portable communication equipment.

Wutong Holding Group (A)

Wutong Holding Group is principally engaged in research, development, manufacture and sale of wireless communication connection radio frequency (RF) connection system, fiber-optical connection products, and mobile communication terminal devices. Co.'s products include RF connecting devices, connection structures and passive devices, optical fiber connectors, optical splitters and couplers, optical fiber distribution frames, antennas, and coaxial cables. Co. is also engaged in the manufacture and sale of electronic products, computer hardware and software, internet of things information technology; import and export businesses; industry investments; and investment management.

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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