Int'l Insights: Emerging Markets Equity Strategy
Highlighted themes and actionable charts:• Brazil is reassuming a leadership role. BRIC markets continue to outperform the broad EM Index, and we recommend overweighting this segment. Within the group, Brazil is particularly attractive. The Bovespa Index, which broke out in Sept. above secular resistance, exhibits a timely pullback opportunity. Add exposure/overweight... see below
• Actionable countries. In addition to Brazil, attractive set-ups include: Korea (the KOSPI is pulling back to support), Russia (the RTSI is consolidating above the 200-day MA, and South Africa (JSE has pulled back to base support)... see page 2
• Sector strength. Tech's long-term leadership status remains intact. Stay overweight until its relative strength trend breaks down. Other sectors exhibiting improving relative strength: Energy, Materials, and Health Care... see page 3
• Bottom-up ideas. Today's report includes a wide variety of bottom-up recommendations, spanning most sectors and all market capitalizations... see pages 4-17
o Chemical stocks, especially Asian-based names, are breaking out from base patterns: Formosa Chemicals & Fibre (1326-TW), Formosa Plastics (1301-TW), LG Chem (051910-KR), and Nan Ya Plastics (1303-TW).
o Multi-year base patterns are also prevalent throughout two other groups: (1) Metal Fabricators, such as Bharat Forge (500493-IN) and Poongsan (103140-KR), and (2) Trucks/Construction/Farm Machinery, including United Tractors (UNTR-ID), Ashok Leyland (500477-IN), CRRC (1776-HK), and Weichai Power (2338-HK).
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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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