EM leadership screen & chart book
Notable themes:• Tech refuses to relinquish its leadership status. It's an arguably extended trend--on an absolute and relative basis--but tech refuses to deteriorate. Its relative strength trend just hit all-time highs. Stay overweight, but recognize this sector is overdue for a consolidation. Several highlights in this week's screen: SK hynix (000660-KR), LG Uplus (032640-KR), Hana Microelectronics (HANA-TH), and Pegatron (4938-TW).
• India is extending its post-breakout rally. India broke out two weeks ago, and has since continued its upward trajectory. Though it didn't pass this week's screen, Tata Motors (TTM) is bullishly inflecting. Buy.
• Brazil's paper stocks. As we highlighted last week, paper stocks--Fibria Celulose and Suzano Papel--closed in the black on the day Brazil closed down nearly 10% -- a clear sign of leadership. See inset chart.
• Korean is developing as a leader. The KOSPI is going vertical following the recent breakout from a multi-year base. While the price advance is extended, Korea's relative strength (vs. MSCI EM) is just beginning to round higher. Plenty of Korean stocks passed this week's screen ranging from airlines (Korean Air Lines) to financial securities firms (Meritz Securities). Overweight.
• BIDU is bullishly inflecting. The ADR, along with many other US-listed Chinese names, is emerging from a multi-year consolidation. Buy.
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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.
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