EM Leadership Screen & Chart Book
​EM screen and chart book... Our Emerging Market Screen & Chart Book helps pinpoint leading stocks, weeding out lagging and stagnating trends. This is performed through a screen with a simple filter: only stocks trading within 5% of a 52-week relative strength high make the cut. From this list, we scan through each chart (daily, weekly and monthly timeframes) and highlight our favorites in the following pages.
Today’s report contains:
MSCI EM sector relative strength overview... pages 3-4
Actionable charts... pages 5-18
The screen... pages 19-26
Screen Parameters:
Market Cap > $500mil ($USD)
Trading within 5% of a 52-week relative strength high (vs. MSCI Emerging Market Index)
Notable themes:
The MSCI EM Index continues to carve out a 10-month bottoming pattern just above the 18-year uptrend (see next page). We believe this sets the stage for a meaningful leg higher. Also supporting this outlook, the U.S. Dollar Index is beginning to deteriorate, approaching a breakdown below the 93 support level.
India is one of our favorite EM countries, and it continues to screen well based on relative strength. The SENSEX Index is overtaking its 200-day MA, marking the end of the 12-month correction and the resumption of the long-term advance. Internally, auto-related stocks look attractive at current levels: Tata Motors (500570-IN) just gapped above resistance, and Mahindra & Mahindra (500520-IN) is emerging from a base -- accumulate.
Samsung Electronics, the largest single-weighting in the MSCI EM Index, is bullishly inflecting. Accumulate.
The EM Tech Sector is breaking out to decade relative strength highs. No surprise here given the above-mentioned Samsung Electronic’s (005930-KR) bullish inflection and Taiwan Semi Manufacturing’s (2330-TW) swift rebound off its 200-day MA. Overweight.
Consumer Discretionary is recovering. The sector’s relative strength trend is bullishly inflecting after a four-month pullback. Naspers (NPN-ZA), the largest single-weighting (17%), is driving this trend. Overweight.
Speaking of Consumer Discretionary, and to reiterate a past recommendation, we still like the department store theme. Short-term pullback opportunities exist in: S.A.C.I. Falabella (FALABELLA-SGO), Robinson Department Stores (ROBINS-TH), and Ripley Corp (RIPLEY-CL).
Real estate developers are screening well, especially Pacific Rim names like SM Prime Holdings (SMPH-PH), Ayala Land (ALI-PH), and Metro Pacific Investments (MPI-PH).
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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