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

Vermilion Int'l Compass: Global Equity Strategy

After failing to break above resistance, global equities (MSCI ACWI) have had a rough start to the third quarter. Tuesday's 10-year low reading for September's US ISM manufacturing index further spooked investors and reignited global growth concerns. Continued weakness in global manufacturing and the US-EU tariff escalation raises the potential for a breakdown in global equities, however our outlook remains neutral as long as the MSCI ACWI remains confined to its horizontal range.

• Prevailing trends continue for major indexes. Trends that began in March/April remain intact. That is, the MSCI ACWI and EAFE remain in horizontal trading ranges and MSCI EM and ACWI ex-US are making lower highs and lower lows. Until there are breakouts or breakdowns our expectation is that these trends will continue... see chart below and page 2.

• Positive developments for heavily-weighted EM holdings. Taiwan Semiconductor (2330-TW) and Samsung Electronics (005930-KR) - the third and fourth largest holdings within MSCI EM, respectively - exhibit bullish price and RS inflections, providing us with a glimmer of hope that MSCI EM can turn things around. Add exposure to these two heavyweights... see page 3.

• Actionable Theme: Technology. The Vermilion int'l Technology Sector sits atop our Relative Strength Rankings (RSR) and remains in a leadership position. Japan is leading the way... see page 4.

• Actionable Theme: Construction. Construction & Engineering and Building Products/Construction Materials stocks offer some bright spots without getting too defensive amid this recent pullback.... see page 4.

• Actionable Theme: Real Estate. The STOXX Europe 600 Real Estate supersector is breaking topside a 4.5-year base and Japanese Real Estate Groups are moving into a leadership position. Add exposure... see page 5.
Underlyings
ASML Holding NV

ASML Holding provides lithography systems for the semiconductor industry, manufacturing machines that are used in the production of integrated circuits or chips. Co. develops, produces, markets, sells and services advanced semiconductor equipment systems exclusively consisting of lithography systems. Co. sells its products to micro-processor manufacturers and Foundries, NAND-Flash memory and DRAM memory chipmakers. Co.'s products line includes the following: PAS 5000 lithography systems, which Co. no longer manufactures but continues to refurbish; PAS 5500 products; TWINSCAN DUV systems and TWINSCAN EUV systems based on a new platform utilizing the concepts of the TWINSCAN platform.

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.

Daiwa House Industry Co. Ltd.

Daiwa House Industry is a home builder. Along with its subsidiaries, Co. operates in seven business segments. Co. is engaged in the construction and sale of housings, the contract work of building reconstruction, the agency of real estate trading and the construction support. Co. develops, constructs and manages leasing houses and provides agency services; develops, sells and manages condominium buildings; develops, constructs, manages and operates commercial facilities; develops and constructs logistic, health care facilities, as well as constructs, manages and operates temporary buildings; manages and operates resort hotels, golf courses, fitness clubs and health care facilities.

Daiwa Office Investment Corporation

Daiwa Office Investment is a real estate investment trust that invests in office buildings and is managed by Daiwa Real Estate Asset Management Co., Ltd. The office properties Co. invests are buildings with floor area over 2,000 sq. m. They are within walking distance of train stations in the city center. As of Nov 30 2017, Co.'s portfolio consisted of 580 tenants and total leasable 338,377.31 sq. m. of area. Approximately over 60% of total portfolio is located in the central five wards of Tokyo. The remaining is in the Tokyo metropolitan area, as well as Osaka and Nagoya areas.

Fabege AB

Fibra Uno Administracion SA de CV

Fibra Uno Administracion SA de CV (Fibra Uno) is a Mexico-based company engaged in the operation of commercial real estate investment trust (REIT). The Company focuses on operating and developing a range of real estate assets for leasing, mainly in the industrial, retail and office segments. It aims at acquisition, development, rental and management of various types of commercial real estate projects in Mexico, including industrial, retail, office and mixed-use projects. The Company's portfolio comprises over 510 properties. Its business model includes portfolio management, maintaining relationships with tenants, sourcing of off-market acquisition opportunities, integration of acquisitions into portfolio, development and construction activity and growth of services businesses.

Gecina SA

Gecina is a rental real estate company. Co.'s purpose is to operate individual rental properties or group of properties located mainly in France. Co.'s properties include commercial assets (offices and retail outlets), residential assets, logistics assets, hotels and healthcare facilities. Co. is organized around two main sectors and one ancillary segment: Economic sector comprising the commercial segment (offices and retail outlets), the portfolio of logistics properties and of hotel buildings; Demographic sector comprising traditional residential units (housing units property holding), portfolio of students residences and of healthcare facilities; Ancilary segment of real estate services.

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.

Hufvudstaden AB Class A

Hufvudstaden AB is a property company that owns and manages 30 properties, located in the central parts of Stockholm and Gothenburg, Sweden. Co.'s principal area of business is the ownership, development and management of commercial properties. The holdings comprise commercial properties with office and retail tenants, divided between three business areas: Stockholm City East, Stockholm City West and Gothenburg. The office tenants are to be found in sectors such as banking, finance, law, information technology, media and recruitment. Store tenants include international brands as well as Swedish retailing chains. Co. also carries on its own parking operations through Parkaden AB subsidiary.

Ichigo Office REIT Investment Corporation

Ichigo Office Reit Investment is a real estate investment trust that invests primarily in housing properties and is managed by Ichigo Real Estate Investment Advisors Co., Ltd. As of Apr 30 2015, Co.'s portfolio consisted of 65 properties with 605 tenants and total rentable 184,919.13 sq. m. of area. Co. invests include 48 office buildings, 17 other properties including housing properties, commercial facilities, and hotels. More than 70% of total portfolio is in Tokyo and the Tokyo metropolitan area including Kanagawa, Chiba and Saitama prefectures. The remaining is in Aichi, Miyagi, Toyama, Oita, Saga, Kagawa, Akita, Kumamoto, Osaka, Hokkaido and Fukuoka prefectures.

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.

L E Lundbergforetagen AB Class B

L E Lundbergforetagen AB is an investment company that manages and develops a number of companies. The asset portfolio includes the wholly owned real estate company, Fastighets AB L E Lundberg, the publicly traded subsidiaries, Hufvudstaden and Holmen and the associated companies, Indutrade and Husqvarna. Co. also has major shareholdings in Industrivarden, Handelsbanken, Sandvik and Skanska. Co.'s subsidiary, L E Lundberg Kapitalforvaltning, is engages in securities trading. Operations consist of real estate operations, the manufacture and sale of printing paper, paperboard and sawn timber products, forest and power operations, and equity management (including securities trading).

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 Estate Company Limited

Mitsubishi Estate is a real estate company. The Building segment is engaged in the development and leasing of office buildings. The Lifestyle Property segment is engaged in the development, leasing and operation of retail properties. The Residential segment is engaged in the construction and sale of condominiums and single-family houses. The International segment is engaged in the real estate leasing and development in the U.S., U.K. and Asia. The Architectural Design & Engineering segment is engaged in the design and administration of construction and civil engineering projects. Co. also operates hotels and provides real estate investment and brokerage services.

Neinor Homes SA

Neinor Homes SA, formerly Neinor Homes SLU, is a Spain-based company engaged in the real estate sector. The Company focuses on the design, construction and promotion of residential properties. It develops housing projects in various Spanish cities, such as Malaga, Madrid, Barcelona, Cordoba, Vizcaya, Alicante, Almeria and Gerona.

Open House Co. Ltd.

Open House Co., Ltd. is principally engaged in detached business, brokerage business and open house architects business, which is integrated manufacturing and sales business style. The Company operates in six segments. The Brokerage segment engages in real estate brokerage business. The Detached Houses segment engages in construction of detached houses and sale of subdivision land. The Open House Architect segment engages in construction contracts business. The Condominium segment engages in development and sale of new apartments. The Revenue Real Estate segment acquires, operates and sells profitable real estate. The Others segment engages in residential related loan business, financial services business, real estate market analysis, sales of real estate, and creation of building confirmation application drawing.

Parco Co. Ltd.

PARCO is mainly engaged in the operation of shopping complexes and specialty stores. Co. operates 26 shopping complexes and 201 specialty stores throughout Japan as of Feb 28 2017. Shopping Complex Business segment is engaged in the development, management and operation of shopping complexes under the name of "PARCO" and "ZERO GATE." Retail Business segment is involved in the development and operation of specialty stores offering wristwatches, eyeglasses, cosmetics, accessories and sundry goods. Space Engineering and Management Business segment is engaged in the design, planning, construction, management and maintenance of shopping centers and commercial facilities.

Parkway Life Real Estate Investment Trust

Parkway Life Real Estate Investment Trust is a healthcare real estate investment trust. Co. invests in income-producing real estate and/or real estate-related assets in the Asia-Pacific region (including Singapore) that are used primarily for healthcare and/or healthcare-related purposes. This include, but not limited to, hospitals, healthcare facilities and real estate and/or real estate assets used in connection with healthcare research, education, and the manufacture or storage of drugs, medicine and other healthcare goods and devices. Co.'s segments include Hospital Properties; Nursing Homes; and Pharmaceutical Manufacturing and Distribution Facility.

Parque Arauco SA

Parque Arauco is a holding company based in Chile. Through its subsidiaries, Co. is engaged in the acquisition, development and management of shopping centers in Latin America. Co. operates shopping centers throughout Chile, Peru and Argentina, including the joint property and joint management of Marina Arauco (Vina del Mar) and Mall Center Curico with Paris (formerly known as Almacenes Paris) and Ripley. Co. operates certain shopping centers with IRSA (Alto Palermo). Co. operates under the PARQUE ARAUCO® trade mark.

Rohm Co. Ltd.

ROHM is mainly engaged in the manufacture and sale of electronic components. ICs segment offers analog switches, multiplexers, logic ICs, memory ICs, amplifiers, clocks and timers, sensor ICs, data converters, interface ICs communication LSIs, audio and video ICs and other ICs. The segment also provides foundry services. Discrete Semiconductor Devices segment offers diodes, transistors, light emitting diodes and laser diodes. Modules segment offers print heads, optical modules and power modules. Co. is also engaged in the manufacture and sale of resistors and tantalum capacitors.

RS Technologies Co. Ltd.

RS Technologies is mainly engaged in the wafer business. Along with its subsidiary, Co. is engaged in the reclaim and sale of silicon wafers such as used monitor wafers, the manufacture and sale of prime silicon wafers, and the coating of silicon wafer oxide films. Co. is also engaged in the purchase and sale of semiconductor manufacturing equipment, including used semiconductor-related devices and consumable materials. In addition, Co. is engaged in the solar power business, including the operation of a solar power station; the sale of semiconductor-related materials such as chemical filters; the technology consulting business; and other.

S IMMO AG

S Immo AG is an Austria-based company engaged in the real estate sector. The Company specializes in the acquisition, letting and sale of properties. Furthermore, It offers real estate project developments, which includes Einsteinova office, Quartier Belvedere Central, and The Mark office project, among others, renovation of existing properties, asset and portfolio management and a range of services, such as facility management and brokerage. The Company's real estate portfolio comprises residential, office, retail and hotel properties. It operates four geographical segments: Austria, Germany, Central Europe (CEE) and Southeastern Europe (SEE). In addition, the Company is a parent of CEE Immobilien GmbH, Hansa Immobilien EOOD, Rega Property Invest sro, Ikaruspark GmbH, SC Societate Dezvoltare Comercial Sudului (SDCS) SRL, Maior Domus Hausverwaltung GmbH, and Eurocenter doo, among others.

Safestore Holdings plc

Safestore Holdings is engaged in the rental of self-storage space and the sale of ancillary products such as insurance and merchandise (for example, packing materials and padlocks) in both the U.K. and Paris.

Samsung Electronics Co. Ltd.

Samsung Electronics is engaged in the manufacture and sale of electronic goods, communication products, semiconductors, telecommunication equipment, home appliances and other similar products. Co.'s products are mobile phones, MP3 Players, DVD players, video equipment, including Blu-Ray, TVs and VCRs; household appliances, including microwave ovens, refrigerators, home air conditioners, washing machines, ultrasonic humidifiers, dehumidifiers, vacuum cleaners and other small electrical goods; audio equipment, including semiconductors, information systems, and computers; miscellaneous parts; other products, including automatic vending machines, refrigerated display cases and electric tools.

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).

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.

Taiwan Semiconductor Manufacturing Co. Ltd.

Taiwan Semiconductor Manufacturing is a foundry in the semiconductor industry which engages mainly in the manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing of masks. Co. also engages in the researching, developing, designing, manufacturing and selling of solid state lighting devices and related applications products and systems, and renewable energy and efficiency related technologies and products. Co.'s products include logic semiconductors, mixed-signal/radio frequency semiconductors, CMOS image sensor semiconductors and high voltage semiconductors.

TIS Inc.

TIS is a holding company mainly engaged in the information and communications businesses. Co. operates three principal business segments: information technology ("IT") infrastructure services, financial IT services, and industrial IT services. Co. is engaged in the provision of self-administered computer utility or system operation services through large IT facilities, including data centers; and the support of clients to use IT in their operations and in the execution of their business activities with IT expertise and business know-how to the finance industry and industrial and public sectors. In addition, Co., through its subsidiaries, is engaged in the real estate business.

Tokyu Fudosan Holdings Corp.

Tokyu Fudosan Holdings is a holding company mainly engaged in the real estate business. Co., through its subsidiaries and associated companies, operates in seven business segments: Urban Development, Residential, Property Management, Real-Estate Agents, Wellness, Tokyu Hands, and Innovation Business. Co. is engaged in the development, construction and sale of condominiums, detached houses and buildings; the contracted construction of custom-built houses; the retail sale of materials for living; the development, lease, under lease and management of buildings; the facilities management for buildings and condominiums; the operation of leisure and sports facilities; and others.

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.

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.

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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