Report
Dave Nicoski ...
  • Ross LaDuke
EUR 233.43 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Initial Low Established

Several equity indexes and indicators we watch are telling us an initial primary low has been established for global equities (ACWI-US). At the same time, after this type of major waterfall decline there is often a test of this initial low - and oftentimes we get an undercut of the initial low. Barring approval of a first-line therapy for COVID-19 we are of the belief that we will get an eventual test of this initial low and potentially an undercut. Below we provide updates on several indicators which tell us an initial primary low has been established.

· Bullish Short-Term Price Reversals. Indexes around the globe are making bullish short-term price reversals topside 3-week downtrends. This is significant as it provides new points of reference (i.e., support and resistance areas) and also considering it comes after 30%+ declines... see chart below of the ACWX-US and page 2 for index overviews.

· US Dollar. The US dollar (DXY) has weakened over the past week signaling diminished demand for safe havens. We believe global equities can bottom as long as the DXY fails to move decisively above $103 resistance... see page 3.

· Bullish Short-Term Reversal In The Global Discretionary vs. Staples Ratio. The consumer is who will lead us out of the current bear market, but not by spending on staples. The short-term bullish reversal in the discretionary vs. staples ratio suggests risk appetites are improving... see page 3.

· Commodities Stabilizing. The Bloomberg Commodity index (BCOM) shows a bullish short-term reversal as WTI crude oil and copper prices remain above their respective support levels we have been watching... see page 4.

· Needs Improvement. Certain metrics continue to tell us that global equities are not yet out of the woods and suggest a test of the lows (at minimum) could be forthcoming. Such metrics include (1) high yield spreads which remain elevated and have only come down marginally, and (2) lackluster breadth metrics such as the ACWX advance/decline line and % of stocks above their 50- and 200-day MAs. We need to see these metrics improve in order to have confidence that global equities are truly bottoming.

· Actionable Themes: Health Care, Technology, Staples, Additional Bottom-Up Ideas. We continue to recommend areas with defensive and/or growth characteristics. We are also expanding our recommendations to include bottom-up ideas within several other Sectors..
Underlyings
Argo Graphics Inc.

ARGO GRAPHICS is mainly engaged in the information technology ("IT") business. Co.'s operation is dived to four divisions. PLM Solution division is engaged in the design, manufacture, sale, maintenance and disposal of computer systems, such as computer aided design ("CAD") systems. System Building Support division provides system development support services for servers and personal computer ("PC") clusters. Hardware Maintenance and Others division maintains its machines provided by Co.'s PLM solution and system building support businesses. EDA Solution division designs and sells CAD system mainly to companies which offer semiconductor products and liquid crystal products.

ASML Holding N.V.

ASPEED Technology

Aspeed Technology Inc. is mainly engaged in the research, development, design, manufacture and sale of electronic chips. The Company's products include server management chips, which are mainly used as server substrate management control chips, server backplane control chips, graphic process units (GPUs) and others; personal computer (PC) audio-video extension chips, which are mainly used in remote PC extension products, remote audio and video extension products, digital television walls and other applications, as well as other products. The Company distributes its products within domestic market and to overseas markets.

Australian Bauxite Ltd

Australian Bauxite Limited. Australian Bauxite Limited (ABx) is a bauxite explorer, producer and mining company. The Company's principal activities include bauxite exploration and development programs in Queensland, New South Wales and Tasmania. The Company operates in the mineral, exploration and development of resources in Australia. It holds approximately 30 bauxite tenements in Queensland, New South Wales and Tasmania exceeding over 5,000 square kilometers. Its projects include Binjour Project, Goulburn and Tasmanian Project. The Company is operating its first mine at the Bald Hill Bauxite project in Tasmania. It also focuses on mines, including Fingal Rail and DL130. Fingal Rail, the second planned ABx Tasmanian mine, which is close to Campbell Town (approximately 10 kilometers North). DL-130, the third planned ABx mine located in Tasmania, which is within approximately 70 kilometers of the Bell Bay Export Port.

Avic Aviation High-Technology Co. Ltd. Class A

Avic Aviation High Technology Co Ltd. Avic Aviation High-Technology Co., Ltd is principally engaged in new aeronautical material business, real estate business, and machine tool business. The Company's main products consist of artificial joints, aviation equipment, composites, common machine tools, digital machine tools, common machine tools and machining centers. The Company operates its aeronautical material business mainly in Beijing, operates its real estate business mainly in Jiang, and operates its sale business of machine tools in most areas of China.

Bachem Holding AG Class B

Bachem Holding is a technology-based company specializing in the development of manufacturing processes for the production of biochemical and pharmaceutical compounds for the pharma and biotech industries, as well as the development of manufacturing processes. Co. specializes in process development and manufacturing of peptides and complex organic active pharmaceutical ingredients and biochemicals for research purposes. In the field of generics, Co. offers both peptides used for the manufacture of pharmaceuticals as well as organic active ingredients that have run out of patent. Co.'s range of research ingredients covers the catalog business as well as custom synthesis.

Beijing OriginWater Technology Co. Ltd. Class A

BEIJING ORIGINWATER TECHNOLOGY CO., LTD. is a China-based company principally engaged in the sale of water purifiers, as well as the provision of waste water treatment solutions. The Company primarily offers technical proposal design, engineering design, technology implementation and system integration, operation technical support and operation services. The Company is also involved in the production of membrane units and membrane material components; the research, development, manufacture and distribution of water purifiers, as well as the provision of water supply and drainage engineering services. The Company operates its business in domestic market.

Beijing Shunxin Agriculture Co. Ltd. Class A

Beijing Shunxin Agriculture is engaged in the production and sale of spirits; processing and sale of meat product; production and sale of fruits and vegetables juices; seed breeding; provision of agricultural technology services; breeding swine; sale of vegetables and fruits; processing agricultural by-product; logistics operation; marketing management; water and construction engineering; real estate development; cultivation and sale of high-grade flowers. Through its subsidiaries, Co. is also engaged in the provision of commercial information and flower warehouse services; and processing and making paper products.

Beyondsoft (A)

BEYONDSOFT CORPORATION is a China-based company principally engaged in the provision of products, solutions and information technology (IT) services for enterprise customers. The Company mainly operates through three business segments. Product and Solution segment mainly provides banking solutions and products, large data services and cloud services. Research and Development Engineering segment is mainly engaged in product development, product testing and software product globalization businesses. IT Operation and Maintenance segment is mainly engaged in the development, management and maintenance of application software, IT infrastructure and enterprise applications. The Company operates its business in domestic and overseas markets.

Bimobject AB

Bimobject AB is a Sweden-based company active in the field of information technology. It supports corporate customers with technology and services related to computer-aided design (CAD) and building information modeling (BIM). It assists building producers and interior manufacturers in development and management of digital replicas of their products as BIM objects, either starting from two-dimensional drawings, CAD data or scanning the physical form of buildings and products. The BIM objects allow carrying detailed physical representation of products, as well as links to product information, websites, contact details and assembly instructions. The Company offers a cloud-based database for BIM objects, BIMobject software applications for formats such as Autodesk Revit and Atlantis (BIM Render), services such as modeling, programming, scripting and conversion, market analysis and online seminars. It operates subsidiaries in Italy, the United States and Poland.

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.

Celltrion Healthcare Co. Ltd.

Celltrion Healthcare is engaged in the manufacturing, distribution and retail sale of a line of biological medicines. Co. provides Remsima, an infliximab biosimilar used for the treatment of rheumatoid arthritis, ankylosing spondylitis, adult and child crohn's disease, psoriasis, psoriatic arthritis and ulcerative colitis. Co. also provides Truxima, a rituximab biosimilar used for the treatment of non-hodgkin lymphomas, chronic lymphocytic leukemia, microscopic polyangiitis and rheumatoid arthritis.

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.

CSL Limited

CSL is engaged in the research, development, manufacture, marketing and distribution of biopharmaceutical and allied products. Co.'s operations are divided into three segments: CSL Behring, Seqirus, and CSL Intellectual Property. CSL Behring is engaged in manufacturing, marketing and developing plasma therapies (plasma products and recombinants). Seqirus is engaged in manufacturing and distributing non-plasma biotherapeutic products. CSL Intellectual Property is engaged in the licensing of intellectual property of Co. to unrelated third parties. Co. operates primarily in five specific geographic areas, namely Australia, the U.S., Germany, Switzerland, and the U.K.

Dimet (Siam) PCL

Dimet (Siam) Public Company is engaged in the business of manufacturing and distribution of coating products (paint), rendering services and painting services. Co. operates in one geographical area in Thailand.

DP World PLC

Emerging Display Technologies Corp.

EMERGING DISPLAY TECHNOLOGIES CORP. is a Taiwan-based company principally engaged in the design, manufacture and sale of electronic parts and computer peripherals products. The Company's primary products include liquid crystal displays (LCDs) and capacitive touch panels (CTPs). The Company's products are primarily used in the manufacturing of notebook computers, desktop computers, portable electronic products, LCD televisions (TVs), electrical toys, mobile phones, electronic calculators and other electronic instruments. The Company mainly operates through four business segments: Taiwan segment, the Americas segment, the Mainland China segment and others segment. The Company mainly exports its products to the Americas, Asia and Europe.

Evolution Gaming Group AB

Evolution Gaming Group AB (publ) is a Sweden-based company active in the Internet services sector. It develops, produces, markets and licenses integrated business-to-business (B2B) live casino solutions for gaming operators. Its solutions allow a live table gaming by streaming of professional croupier services to end users via the online casino and gaming platforms. The Company has offices and production studios in the United Kingdom, Sweden, Malta, Italy, Spain and Latvia.

Fabrica Nacional de Vidrios C.A.

G-Bits Network Technology (Xiamen) Co. Ltd. Class A

G-bits Network Technology (Xiamen) Co., Ltd. is a China-based company and mainly engaged in planning, development and operation of online game. The main businesses of the company are online game and console game. Online game business includes mobile, pad and other mobile terminal games, personal computer online games and web games. Console game business is mobile terminal console game. The Company distributes its products and service in domestic and overseas markets.

Galenica AG

Galenica AG, previously Galenica Sante Ltd, is a Switzerland-based healthcare services and products provider. The Company's business i divided into three business sectors: Retail, Products & Brands, and Services. The Company manages a locally established pharmacies network in Switzerland. It develops and distributes its own product portfolio, as well as cooperates with a range of business partners, such as Pierre Fabre, Ales Groupe and Vitor Consumer Health for marketing and distribution of such brands as Perskindol, Triofan, A-Derma, Lierac, Phyto, Anti-Brumm and Algifor. Galenica Sante's Services business sector is responsible for management of such logistics sector companies as Galexis, Unione Farmaceutica Distribuzione, Alloga and Medifilm.

GDS Holdings Ltd. Sponsored ADR Class A

Glodon Company Limited Class A

GLODON COMPANY LIMITED, formerly GLODON SOFTWARE COMPANY LIMITED., is a China-based software company. The Company's software products can be divided into tool software products and management software products. The Company is also engaged in engineering cost business, engineering construction business, engineering information business and overseas business. The Company's business areas include Beijing, Northern China region, Northeastern China region, Northwestern China region, Central and Southern China region, Eastern China region, Southern China region, Southwest China region and overseas markets.

Guangdong Haid Group Co. Limited Class A

Guangdong Haid Group Co., Limited is a China-based company principally engaged in the production and distribution of feedstuffs. The Company's main products include feedstuffs for aquatic products, livestock and poultry, aquatic animal seedlings, animal health products and biological products, as well as pigs, among others. The Company also provides integrated solutions for breeding and culturing process. The Company distributes its products in domestic market and to overseas markets.

Guangxi Wizhou Zhongheng Group Co. Ltd. A

Guangxi Wuzhou Zhongheng Group is engaged in the investment and management of medical, energy and foundation facilities, city public utilities, hotel and tourism industries, and logistic industry; the development, management, and investment of real estate; the operation and management of state-owned assets; and domestic commercial trading. Through its subsidiaries, Co. is engaged in the leasing of food and beverages, entertainment and office buildings and motel services; industrial- and civil-used buildings construction; decoration projects; the manufacture and operation of chinese and western prepared medicines, chemical raw material and nutritional food; and import and export businesses.

Hainan Poly Pharm (A)

Hainan Poly Pharm Co., Ltd. is a China-based company principally engaged in the research, development, production and sales of medicine. The Company operates through two main segments. The Main Business segment is primarily involved in the research, development and production of injections, oral solid dosages, dry suspensions and active pharmaceuticals ingredients (API). The Company's products include anti-allergic medicine, antibiotic medicine and digestive. The Other Business segment is mainly engaged in the construction engineering design, decoration design and provision of construction engineering technology services, among others.

Haohua Chemical Science & Technology (A)

Sichuan Tianyi Science & Technology is engaged in the manufacture, sale, research, development, the provision of technology service and related engineering design and contract services for carbon chemistry technology, catalysts, gas separation technology and equipment, synthesis linalool, vitamin E series, fine chemical products and industry gas. Through its subsidiaries, Co. is also engaged in the research, development, manufacture and sale of synthetic resin, coating and additive products; the sale of chemical industry raw materials; coating engineering design and construction; project investments; assets management and administration; and the provision of computer technical services.

Hope Education Group (P Chip)

Hope Education Group Co Ltd. HOPE EDUCATION GROUP CO., LTD is an investment holding company which mainly provides higher education services. The Company with its subsidiaries operates schools and colleges in mainland China and charges tuition and boarding fees. The main schools and colleges operated by the Company include Southwest Jiaotong University Hope College, Jinci College of Shanxi Medical University, Sichuan Tianyi College, Business College of Guizhou University of Finance and Economics, Guizhou Vocational Institute of Technology and others.

Jiangsu Hengli Hydraulic Co. Ltd. Class A

Jiangsu Hengli Hydraulic is principally engaged in the research, development and manufacture of high-pressure oil cylinder, hydraulic parts, hydraulic systems, hydraulic pumps and motors, hydraulic valves, precision casting products, and related technical and support services; manufacture of machinery parts, and sale of self-produced products; and road freight transportation services (general freight). Co.'s major products include hydraulic cylinders, mobile valves, industrial valves, piston pumps, test benches, hydraulic systems, precision casting, cold-drawn seamless tube and pneumatic products.

Joyoung Company Limited Class A

Joyoung Co.,Ltd is a China-based company, principally engaged in the research and development, manufacture and distribution of small kitchen appliances. The Company's products include soymilk makers, induction cookers, blenders, juicers, electric pressure cookers, electrical kettles, rice cookers, water purifiers, soybean materials and commercial soymilk makers, among others. The Company distributes its products within domestic market and to overseas markets.

Lasertec Corp.

Lasertec is mainly engaged in the development, manufacture, and sale of semiconductor-related products and other products, as well as the provision of services for its products. Co.'s principal products include systems related to defect inspection/measurement of mask, mask blanks and wafer; systems related to defect inspection of large size photomask and PV cell conversion efficiency distribution measurement system; and systems related to microscope based on confocal optics. Along with its subsidiaries, Co. offers its products and services in Japan as well as in North America, Europe, and Asia regions.

Livzon Pharmaceutical Group, Inc.

Muyuan Foods Co. Ltd. Class A

Muyuan Foods Co.,Ltd. is a China-based company principally engaged in the breeding and distribution of pigs. The Company's main products consist of piglets, boars and commodity pigs. The Company operates its business mainly through feedstuff processing, hog breeding, boar breeding and commodity pig feeding. The Company operates its business in domestic market.

Nsfocus Information Technology (A)

NSFOCUS Technologies Group Co., Ltd., formerly Nsfocus Information Technology Co., Ltd., is engaged in the research, development, manufacture and distribution of specialty security products, as well as the provision of related services. The Company operates its businesses through three segments, including Security Product, Third-party Product and Security Service segments. The Security Product segment consists of security evaluation products, including benchmark verification systems (BVSs), remote security assessment systems (RSASs); detection and prevention products, including anti-DDoSsystem (ADS) and Web application firewall (WAF); security monitoring products, including security audit system (SAS) and others. The Security Services segment is engaged in the provision of the professional security services, such as security evaluation, security management, risk management and front stage warning services.

Plus500 Ltd.

Plus500 provides contracts for difference (CFD) that deliver trading facilities on shares, forex, commodities, and indices. Co. operates an online trading platform for retail customers to trade CFDs internationally over approximately 1,900 financial instruments comprising equities, exchange traded funds, foreign exchange, indices, and commodities. It enables retail customers to trade CFDs in approximately 50 countries.

Proya Cosmetics (A)

Shanghai AtHub (A)

Shanghai AtHub Co., Ltd. is a China-based company principally engaged in the provision of data center server hosting services and network bandwidth services. The Company mainly provides wholesale data center services and retail data center services. The wholesale data center services mainly include customized server hosting services provided to large Internet companies or telecom operators. The retail data center services include standardized server hosting services and network bandwidth services to small and mid-sized Internet companies and enterprise customers. The Company is also engaged in the providing of data center value-added services, including planning consulting, design consulting, operations management outsourcing, acceptance verification and other services. The Company mainly operates its business in China.

Shanghai Bairun Investment Holding Group Co. Ltd. Class A

SHANGHAI BAIRUN INVESTMENT HOLDING GROUP CO., LTD., formerly SHANGHAI BAIRUN FLAVOR & FRAGRANCE CO., LTD., is a China-based company, principally engaged in the research and development, manufacture and distribution of premade cocktails. The Company distributes its premade cocktails under the brand name RIO. The Company is also engaged in the research, development, manufacture and distribution of fragrances. The Company distributes its fragrance products under the brand name Bairun. The Company distributes its products mainly within domestic markets.

Shenzhen Kangtai Biological Products Co. Ltd. Class A

Shenzhen Kangtai Biological Products Co.,Ltd. is a China-based company and mainly engaged in research and development, manufacture and sale of vaccine. The main products of the company are recombinant hepatitis B virus, haemophilus influenzae type b combined vaccine, measles rubella combined attenuated live vaccine, non-cell Bai Bai Po haemophilus influenzae combined vaccine and other products. The Company operates its businesses primary in domestic market.

Sichuan Jiuyuan Yinhai Software (A)

Sichuan Jiuyuan Yinhai Software.Co.,Ltd is a China-based company mainly engaged in information service business. The Company focuses on the four strategic directions of medical and medical insurance, digital government affairs, smart cities, and military-civilian integration. It is aimed at government departments and industry ecological subjects, and empowers people's livelihood and national defense with information technology, big data applications and cloud services. The Company mainly operates its business in the domestic market.

Stillfront Group AB

Stillfront Group AB (publ) is a Sweden-based independent creator, publisher and distributor of digital games. The Company operates through a number of near-autonomous subsidiaries, including Bytro Labs in Germany, Coldwood Interactive in Sweden, Power Challenge in the United Kingdom and Sweden, and Dorado Online Games in Malta, Simutronics in the United States, and Babil Games in United Arab Emirates and Jordan, among others. The Company's games portfolio includes Call of War, DragonRealms, ManagerZone Football, Lara Croft Relic Run, Supremacy 1914 and Unravel, among others. The games are distributed globally, however the main markets are Sweden, Germany, the United States, United Kingdom, Middle East and North Africa.

Tallink Group

Tallink Grupp AS is a ferry operator providing mini-cruise and passenger transport services in the Baltic Sea region. The Company also offers cargo services on the various routes between Finland-Sweden, Estonia-Finland, Estonia-Sweden, Finland-Germany, and Latvia-Sweden under the brand names of Tallink and Silja Line. In addition, the Group operates four hotels in Tallinn and one in Riga. As of March 28, 2013, the Company's major shareholder was Infortar AS with a stake of 35.81%.

United Laboratories International Holdings Ltd.

Vinda International Holdings Limited

Vinda International Holdingsis principally engaged in investment holding. Through its subsidiaries, Co. is principally engaged in the manufacture and sales of household paper products and personal care products. Co.'s products include toilet roll, hanky, box tissue, paper napkin,sanitary napkins, softpack, wet wipe, baby diaper and others. Co. manages its four major product categories for household paper, incontinence care, feminine care and baby care under ten brands, namely Vinda, Tempo, Tork, Babyfit, Libero, Sealer, VIA, Libresse, TENA and Dr.P.

Wiwynn Corp.

Wiwynn Corp is a Taiwan-based company mainly engaged in the research, development, design, manufacture, testing and distribution of servers for cloud services and Hyperscale Data Centers. The Company's products mainly include computers and peripheral equipment, data storage media, electrical equipment and audio-visual electronic products, information software and others. The Company mainly distributes its products in Taiwan, Americas, Europe, Asia and other regions.

Zai Lab Ltd. Sponsored ADR

ZTO Express (Cayman) Inc. Sponsored ADR Class A

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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