Report
Dave Nicoski ...
  • Ross LaDuke
EUR 46.92 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

China Technology Sector Improving -- Add Exposure

Market dynamics remain largely positive which continues to support our constructive outlook, and we view recent weakness as a buying opportunity. Below we highlight notable recent developments.

Index Overviews. Overall, not much has changed at the index level. The MSCI ACWI, ACWI ex-US, and EAFE indexes remain in uptrends, and the MSCI EM index (EEM-US) continues to build a bullish base. US and European equities (S&P 500, STOXX 50) remain in uptrends. China's Shanghai Composite is holding above 3500 base support. Hong Kong's Hang Seng appears to be building a bullish base. Japan (TOPIX, TOPIX Small) is consolidating... see page 2.
Global Defensive Sectors With Bearish Relative Strength Inflections. Global defensive Sectors including MSCI ACWI Utilities and Consumer Staples are making bearish RS inflections. This is yet another sign of improving risk appetites that is consistent with historical bull markets. It is worth noting that despite RS deterioration for the MSCI ACWI Sectors, Stapes and Health Care remain attractive within Europe... see page 3.
Actionable Theme: Technology. The Technology Sector is improving globally and we recommend adding selective exposure. The China Tech Sector is particularly attractive as the CSI 300 Information Technology Sector displays bullish price and RS inflections -- add exposure. The Japanese Tech Sector is also worth a look as it is one of the few attractive Sectors in Japan (alongside Health Care)... see chart below and pages 4 and 6-9.
Actionable Themes: Financials & Materials. Hawkish takeaways from last week's FOMC meeting have led to price and RS pullbacks for the Financials and Materials Sectors, all while global sovereign bond yields have been generally unchanged and commodity prices remain bullish. We believe recent weakness is likely overdone and we recommend adding exposure to Financials and Materials... see pages 5 and 10-16.
Underlyings
Beken (A)

Computershare Limited

Computershare is engaged in the operation of investor services, which provides registry maintenance and related services; plan services, which provides administration and related services for employee share and option plans; communication services, which comprise document composition and printing, intelligent mailing, among others; business services, which provides bankruptcy, class action and utilities administration services, voucher services, corporate trust services and mortgage servicing activities; stakeholder relationship management services, which provides investor analysis, investor communication and management information services; and technology services.

Geovis Technology (A)

IBIDEN CO. LTD.

IBIDEN is an electronics related business group based in Japan. Co. operates in two business segments: Electronics segment manufactures and sells printed wiring boards ("PWBs") and package substrates; and Ceramics segment manufacture and sells environment-related ceramics products, graphite specialty products, and ceramics fiber. In addition, Co. manufactures and sells housing equipment and melamine decorative laminates; designs and constructs slopes, garden landscape and environmental facilities. Co.'s other business activities include synthetic plastic processing; agriculture, livestock and fishery processing; oil products sales; information services; automobile transportation and others.

LianChuang Electronic Technology (A)

Ningbo Yak Technology Industrial is engaged in the research, development, manufacture and processing of garments, accessories and clothes; the provision of garments and accessories technical consultation; the wholesale, retail and acts as an purchasing and selling agent for garment auxiliary materials and chemical raw materials; the provision of automobile freight transportation services; the investment of industry projects; and the import and export of goods and technologies. Co.'s products include hair interlining, fusible interlining, shoulder pad, hanger, chest piece, sleeve head, and interlining for waist.

Lightspeed POS

Maxscend Microelectronics Company Limited Class A

Maxscend Microelectronics Co Ltd. Maxscend Microelectronics Company Limited is a China-based company principally engaged in the research, development and sales of RF frontend chips. The Company's main products are RF frontend chip products such as RF switches and RF low noise amplifiers. The Company's products are mainly used in mobile smart terminals such as smart phones. In addition, The Company collects authorization and technical service fees and royalties from third parties by providing intellectual property (IP) authorization to them. The Company's IP includes WiFi, classic Bluetooth and Bluetooth low energy RF design IP, as well as part of modem design IP. The Company distributes its products both in the domestic market and to overseas markets.

Money Forward Inc.

Money Forward,Inc. is a Japan-based company principally engaged in the platform service business. The Company provides two services. The money forward cloud service is involved in the provision of a cloud enterprise resources planning (ERP) service platform. The platform provides management support for medium-sized and small enterprises to improve efficiency of management and back office operations based on data. The personal financial management (PFM) service is involved in the operation of Money Forward ME platform for solving problems and issues related to personal money through various services.

Sdiptech AB B

Shift

SHIFT Inc. is a Japan-based company mainly engaged in the provision of software test services. The Company operates through two business segments. The Enterprise Market segment is engaged in the provision of general service related to quality assurance of software in business systems and information systems for companies of financial industry, distribution industry, manufacturing industry, communication industry and Web services industry. The Entertainment Market segment is engaged in the provision of general services related to quality assurance of software for enterprises providing mobile games, social games, consumer games and other entertainment products.

Suzhou Good-Ark Electronics (A)

SUZHOU GOOD-ARK ELECTRONICS CO., LTD. is a China-based company, principally engaged in the discrete devices and integrated circuit packaging businesses. The Company mainly offers diodes, bridge rectifiers, surface mounted devices, photovoltaic bypass integrated modules, quad flat no-lead (QFN) package integrated circuit (IC) products and dual flat no-lead (DFN) package IC products, as well as accelerometers and solar silver products. Its products are applied in power supply devices of aerospace, automotives, green lightings, information technology (IT), household appliances, large equipment, and other fields. The Company distributes its products within domestic market and to overseas markets.

TOTVS S.A.

Totvs is engaged in the development and sale of enterprise resource planning software (ERP) and related services. Co. is also engaged in the implementation, consultation, assistance and maintenance services.

Wolters Kluwer NV

Wolters Kluwer operates through four divisions: Health is a global provider of information for medical and health professionals; Financial & Compliance Services is a U.S. provider risk management, compliance, finance, and audit professionals the services they need to optimize risk and business performance, and ensure compliance with local, regional, and global regulation; Tax & Accounting is a provider of tax, accounting, and audit information, and services; and Legal & Regulatory provides customers with expert content, software, and services in the areas of law, business, and regulatory compliance in Europe, North America and Asia Pacific.

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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