Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>With the MSCI ACWI (ACWI-US) approaching the top-end of our expected 2023 trading range at $93, we see limited upside from here, and we believe caution is warranted.</li>
<li>We want to remain overweight Europe and the UK, but we prefer to buy only on pullbacks.</li>
<li>The Hang Seng and MSCI China (MCHI-US) are both getting rejected at their important resistances discussed last week, and we would expect to see a basing process develop below resistance.</li>
</ul>


With the MSCI ACWI (ACWI-US) approaching the top-end of our expected 2023 trading range at $93, we see limited upside from here, and we believe caution is warranted.
We want to remain overweight Europe and the UK, but we prefer to buy only on pullbacks.
The Hang Seng and MSCI China (MCHI-US) are both getting rejected at their important resistances discussed last week, and we would expect to see a basing process develop below resistance.


Caution Warranted; ACWI-US At $93 Resistance; Buys in Communications, Staples, Materials, Financials

Oil & Natural Gas Corp / Technical Analysis

<ul>
<li>MSCI EM (EEM-US) has continued to hold above our $37-$37.50 line-in-the-sand, meaning we are constructive from a price perspective.</li>
<li>We have maintained an underweight to emerging markets, and we are overweight developed international (MSCI EAFE, Europe, Japan) as discussed in in Int’l Compass and ETF Pathfinder reports throughout 2023.</li>
<li>Still, there are plenty of attractive countries and Sectors within the EM landscape, which is what we are focusing on today.</li>
</ul>


MSCI EM (EEM-US) has continued to hold above our $37-$37.50 line-in-the-sand, meaning we are constructive from a price perspective.
We have maintained an underweight to emerging markets, and we are overweight developed international (MSCI EAFE, Europe, Japan) as discussed in in Int’l Compass and ETF Pathfinder reports throughout 2023.
Still, there are plenty of attractive countries and Sectors within the EM landscape, which is what we are focusing on today.


EM Strategy: MSCI EM Financials & Energy Improving-Overweight; Overweights: Taiwan, India, Mexico

<ul>
<li>The MSCI EM vs.EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the DXY peaked in November 2022, and also shows signs of reversing the 2-year downtrend.</li>
<li>As long as the DXY remains below $103.50-$106, we expect outperformance from EM to continue.</li>
<li>China/Hong Kong, Greece, South Africa, and Mexico stand out as attractive countries. Our top actionable Sectors include Communications, Consumer Discretionary, and Technology. We highlight 76 attractive EM stocks.</li>
</ul>


The MSCI EM vs.EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the DXY peaked in November 2022, and also shows signs of reversing the 2-year downtrend.
As long as the DXY remains below $103.50-$106, we expect outperformance from EM to continue.
China/Hong Kong, Greece, South Africa, and Mexico stand out as attractive countries. Our top actionable Sectors include Communications, Consumer Discretionary, and Technology. We highlight 76 attractive EM stocks.


EM Outperformance to Continue (Vs. EAFE) -- Add on a Pullback; DXY Needs to Hold Below $106

iShares MSCI China ETF / Technical Analysis

<ul>
<li>We remain neutral on global equities (MSCI ACWI), we believe upside remains limited with the MSCI ACWI (ACWI-US), S&amp;P 500, and several European indexes still below major resistance.</li>
<li>We continue to expect rangebound price action in the months ahead on the MSCI ACWI.</li>
<li>And, rangebound price action could very well be the theme for all of 2023 (with resistance at $93 and support at $75-77 on ACWI-US)</li>
</ul>


We remain neutral on global equities (MSCI ACWI), we believe upside remains limited with the MSCI ACWI (ACWI-US), S&amp;P 500, and several European indexes still below major resistance.
We continue to expect rangebound price action in the months ahead on the MSCI ACWI.
And, rangebound price action could very well be the theme for all of 2023 (with resistance at $93 and support at $75-77 on ACWI-US)


Hang Seng and MSCI China Bottoming -- Add; Europe Still Leading; Shift From U.S. To Non-U.S.

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Thematic (Sector/Industry)

Piraeus dedicates itself mainly to corporate credit (64% of loans) but also to the consumer segment (36%), backed by CASA funding (71% of deposits) and wholesale markets. The bank commands a 31% and 29% share, respectively, of Loans and Deposits in Greece. Piraeus is especially strong in Northern Greece where it holds a 40% share of all credit.The bank endured a torrid 2020 with Capitalization coming under renewed pressure and modest progress in bringing Asset Quality under better control : true, Asset Quality is much better than at the NPE peak in 2015. FY20/19 results show adverse fundamental momentum and trends with deterioration in Profitability, in NIM, in headline Asset Quality, in Provisioning, and in Capital Adequacy though Efficiency and Liquidity both improved. Management states that it in phase 3 of a strategic plan which now focuses on digitalization, credit expansion, operating efficiency, and a “radical” NPE clean-up.  Management believes that in this phase with the support of shareholders, the bond market, and the government, it can reach sunnier climbs. The bank’s "Sunrise Plan" targets a single-digit NPE ratio over the next 12 months and a share capital increase of some €1.0 billion. The group plans to achieve a single-digit NPE ratio in the next 12 months and &lt; 3% in the medium term. The aim is to get NPEs to about €3.6 billion in the next 12 months and to €1 billion in the medium term from €22.5 billion at FY2020. The NPE reduction plan depends on securitization and derecognition of NPEs with an estimated gross book value of up to €19 billion, including the Phoenix and Vega projects. The incremental NPE securitizations, Sunrise 1 and Sunrise 2, totaling €7 billion and €4 billion, respectively, will be carried out using Greece's Hellenic Asset Protection Scheme 2. Senior notes of roughly €6.5 billion from the “HAPS” transactions will be retained by Piraeus Bank, while it may distribute the majority of the mezzanine and junior notes to shareholders of Piraeus Financial Holdings. The group also intends to sell up to €1.5 billion of NPEs outside “HAPS” to further de-risking initiatives. To complement the aforementioned €1 billion non-preemptive fully marketed offering of shares, the group also plans to issue as much as €600 million of Additional Tier 1 bonds. Piraeus Bank SA also agreed to carve out and sell its merchant acquiring business unit to Euronet Worldwide for €300 million, which will also bolster capital further. Looking ahead, Piraeus is shooting for a CAR of &gt; 16% and a ROTE of &gt; 10%.<div class="content-highlight">A FV of 1% and a PBV of 0.05x are in the global bargain basement. The bank has a bottom quartile PH Score™ (2.2). News flow on a dilutive capital raise have reduced RSI to quite low levels and share price underperformance versus better quality peers is now extreme. If management executes its plan, shares in this rich franchise will be worthwhile at some stage this year with a long-term patient mindset.</div>

Piraeus dedicates itself mainly to corporate credit (64% of loans) but also to the consumer segment (36%), backed by CASA funding (71% of deposits) and wholesale markets. The bank commands a 31% and 29% share, respectively, of Loans and Deposits in Greece. Piraeus is especially strong in Northern Greece where it holds a 40% share of all credit.The bank endured a torrid 2020 with Capitalization coming under renewed pressure and modest progress in bringing Asset Quality under better control : true, Asset Quality is much better than at the NPE peak in 2015. FY20/19 results show adverse fundamental momentum and trends with deterioration in Profitability, in NIM, in headline Asset Quality, in Provisioning, and in Capital Adequacy though Efficiency and Liquidity both improved. Management states that it in phase 3 of a strategic plan which now focuses on digitalization, credit expansion, operating efficiency, and a “radical” NPE clean-up.  Management believes that in this phase with the support of shareholders, the bond market, and the government, it can reach sunnier climbs. The bank’s "Sunrise Plan" targets a single-digit NPE ratio over the next 12 months and a share capital increase of some €1.0 billion. The group plans to achieve a single-digit NPE ratio in the next 12 months and &lt; 3% in the medium term. The aim is to get NPEs to about €3.6 billion in the next 12 months and to €1 billion in the medium term from €22.5 billion at FY2020. The NPE reduction plan depends on securitization and derecognition of NPEs with an estimated gross book value of up to €19 billion, including the Phoenix and Vega projects. The incremental NPE securitizations, Sunrise 1 and Sunrise 2, totaling €7 billion and €4 billion, respectively, will be carried out using Greece's Hellenic Asset Protection Scheme 2. Senior notes of roughly €6.5 billion from the “HAPS” transactions will be retained by Piraeus Bank, while it may distribute the majority of the mezzanine and junior notes to shareholders of Piraeus Financial Holdings. The group also intends to sell up to €1.5 billion of NPEs outside “HAPS” to further de-risking initiatives. To complement the aforementioned €1 billion non-preemptive fully marketed offering of shares, the group also plans to issue as much as €600 million of Additional Tier 1 bonds. Piraeus Bank SA also agreed to carve out and sell its merchant acquiring business unit to Euronet Worldwide for €300 million, which will also bolster capital further. Looking ahead, Piraeus is shooting for a CAR of &gt; 16% and a ROTE of &gt; 10%.A FV of 1% and a PBV of 0.05x are in the global bargain basement. The bank has a bottom quartile PH Score™ (2.2). News flow on a dilutive capital raise have reduced RSI to quite low levels and share price underperformance versus better quality peers is now extreme. If management executes its plan, shares in this rich franchise will be worthwhile at some stage this year with a long-term patient mindset.

Greece

Eurobank Ergasias SA attracts deposits and offers commercial and retail banking services.  The Bank offers mortgage and automobile loans, capital markets and treasury services, manages mutual funds, and offers credit cards and insurance services.

Eurobank Ergasias Sa (EUROB GA)

Caution Warranted; ACWI-US At $93 Resistance; Buys in Communications, Staples, Materials, Financials

With the MSCI $ACWI approaching the top-end of our expected 2023 trading range at $93, we see limited upside from here and believe caution is...

Vermilion Research

EM Strategy: MSCI EM Financials & Energy Improving-Overweight; Overweights: Taiwan, India, Mexico

MSCI EM Financials & Energy Improving -- Upgrading to Overweight; MSCI EM Technology remains an Overweight. Top Country Overweights: Taiwan, India,...

Vermilion Research

EM Outperformance to Continue (Vs. EAFE) -- Add on a Pullback; DXY Needs to Hold Below $106

EM vs. EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the $DXY peaked in November 2022. If the DXY remains below...

Vermilion Research

Hang Seng and MSCI China Bottoming -- Add; Europe Still Leading; Shift From U.S. To Non-U.S.

We remain neutral on global equities $ACWI and expect rangebound price action in the months (possibly year) ahead. Specific $ACWI trading range we...

Vermilion Research

Piraeus: Goodbye 2020, Hello Sunrise

Piraeus struggled in 2020 and news of a capital increase have clobbered shares. We do though see deep value over the long-term - if they execute on...

Paul Hollingworth