Vermilion Int'l Compass: Global Equity Strategy
Japan Remains Leadership; Actionable Pullback in Europe; Downgrading China/Hong KongThere continues to be little traction above $93 on the MSCI ACWI (ACWI-US), which remains the top-end of our anticipated 2023 trading range. At the same time, we cannot get too bearish until there is a break below $90.50 short-term support. If $90.50 breaks, important downside targets are $86, $84, and $75-77 on ACWI-US. Meanwhile, the EURO STOXX 50 is pulling back toward our 4100 buy area (the uptrend from the December 2022 lows) discussed since our April 27, 2023 Int'l Compass. We now view the 4100-4200 area as a buy (to account for the rising trendline). Japan's TOPIX is holding above 2120 support and could be headed higher. Remain overweight Japan, Europe, India, and Taiwan.
Remain Overweight Japan. Japan's Nikkei 225 and TOPIX indexes remain at 33-year highs, and have held above base supports at 30,800 and 2120, respectively. We have discussed buying pullbacks to 1950-2000 on the TOPIX, but it may not go that low. Continue to watch the aforementioned base supports as these are important levels, and would be the gateway to a deeper pullback to 1950-2000 on the TOPIX... see below.
Europe. We continue to recommend an overweight to Europe with RS uptrend support being tested on the STOXX Europe 50 index. Price is also pulling back to likely uptrend support on the STOXX Europe 50 and EURO STOXX 50 indexes... see page 2.
China/Hong Kong Breaking. China's Shanghai Composite displays an RS uptrend violation and is breaking below 3215, and Hong Kong's Hang Seng is breaking below 19,000, two critical supports we have discussed for months. Reduce exposure/be extremely selective... see page 3.
Actionable Theme: Defensives. We continue to favor defensives. We highlight our favorite names to buy/stay long within gold miners, Telecommunications, Consumer Staples, Health Care, and Utilities... see pages 4 and 7-12.
Actionable Themes: Technology & Construction Materials. Two Technology heavyweights that we highlighted last week are worth pointing out again as buys on pullbacks: Dassault Systemes (DSY-FR) and Samsung Electronics (005930-KR). Construction Materials are also leadership. Buy pullbacks in: UltraTech Cement (532538-IN), LafargeHolcim Maroc (LHM-MA), J.K. Cement (532644-IN), and Ramco Cements (500260-IN)... see pages 5-6.
Cellnex Telecom SA is a Spain-based company engaged in the wireless telecommunications (telecom) business. Its activities are divided into three segments: Broadcasting infrastructure, Telecom site rental, as well as Network services and other. The Broadcasting infrastructure division comprises distribution and transmission of television (TV) and frequency modulation (FM) radio signals, operation and maintenance (O&M) of radio broadcasting network, as well as over-the-top (OTT) radio services, among others. The Telecom site rental division provides access to wireless infrastructure, primarily through infrastructure hosting and telecom equipment co-location, mainly for mobile network operators and other wireless and broadband telecom network operators. The Network services and other division offers connectivity services for a variety of telecom operators and radio communication, among others. The Company also develops 5th generation mobile networks (5G) through Alticom BV.
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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