Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Equity Bottom-Up

<ul>
<li>Hong Kong utilities have performed well on an absolute basis and even better on a relative basis this year.</li>
<li>We revisit our original call on them from  January 2024</li>
<li>Continued market volatility and future US  interest rate cuts will provide continued support.</li>
</ul>


Hong Kong utilities have performed well on an absolute basis and even better on a relative basis this year.
We revisit our original call on them from  January 2024
Continued market volatility and future US  interest rate cuts will provide continued support.


Revisiting Hong Kong Utilities-Time to Sell?

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

TSE Tokyo Price Index TOPIX / Technical Analysis

<ul>
<li>We continue to believe a 1-4-month pullback/consolidation is ongoing. Important supports have been violated, including $110 on MSCI ACWI (ACWI-US) and $41 on MSCI EM (EEM-US).</li>
<li>We're shifting our outlook to neutral on $ACWI after being bullish since early-November 2023. Major price breakdowns combined with deteriorating market dynamics have increased the odds of a topping pattern.</li>
<li>Also downgrading Japan to market weight. 7/25/24 we said "Japan's TOPIX breaking below 2800-2815 is near-term bearish, suggests it could pull back to its long-term uptrend, or worse."</li>
</ul>


We continue to believe a 1-4-month pullback/consolidation is ongoing. Important supports have been violated, including $110 on MSCI ACWI (ACWI-US) and $41 on MSCI EM (EEM-US).
We're shifting our outlook to neutral on $ACWI after being bullish since early-November 2023. Major price breakdowns combined with deteriorating market dynamics have increased the odds of a topping pattern.
Also downgrading Japan to market weight. 7/25/24 we said "Japan's TOPIX breaking below 2800-2815 is near-term bearish, suggests it could pull back to its long-term uptrend, or worse."


Downgrading Japan; Stay Defensive; Downgrading Outlook on Global Equities $ACWI to Neutral

Sun Pharmaceutical Industries / Technical Analysis

<ul>
<li>Our long-term bullish outlook (since early-November 2023) remains intact. With that said, we believe a 1-3-month pullback has likely begun.</li>
<li>Supports to watch are at $110 on MSCI ACWI (ACWI-US) and $41-42 on MSCI EM (EEM-US), and whether these levels hold or not will determine the severity of the pullback.</li>
<li>The S&amp;P 500 is violating its 20-day MA, Europe's EURO STOXX 50 is breaking below 4884, and Japan's TOPIX appears to be staging a false breakout at the 2800-2815 level</li>
</ul>


Our long-term bullish outlook (since early-November 2023) remains intact. With that said, we believe a 1-3-month pullback has likely begun.
Supports to watch are at $110 on MSCI ACWI (ACWI-US) and $41-42 on MSCI EM (EEM-US), and whether these levels hold or not will determine the severity of the pullback.
The S&amp;P 500 is violating its 20-day MA, Europe's EURO STOXX 50 is breaking below 4884, and Japan's TOPIX appears to be staging a false breakout at the 2800-2815 level


Pullback Underway; Getting Defensive; Long-Term RS Bottoms for Defensives Is a Reason for Caution

Tracker Fund of Hong Kong  / Equity Bottom-Up

<ul>
<li>A capitulation-type event for the Hong Kong market is ongoing.</li>
<li>High-Dividend stocks will provide a safer return regardless of broader market moves.</li>
<li>A false breakdown below Oct 2022 support will provide a signal for higher-beta exposure.</li>
</ul>


A capitulation-type event for the Hong Kong market is ongoing.
High-Dividend stocks will provide a safer return regardless of broader market moves.
A false breakdown below Oct 2022 support will provide a signal for higher-beta exposure.


Cross Asset Strategy

<ul>
<li>Risk-Reward now skewed towards reward in the Hong Kong market.</li>
<li>Barbell strategy with both high-beta and lower volatility dividend stocks.</li>
<li>Some initial ideas included to add or start a portfolio  incorporating HK stocks.</li>
</ul>


Risk-Reward now skewed towards reward in the Hong Kong market.
Barbell strategy with both high-beta and lower volatility dividend stocks.
Some initial ideas included to add or start a portfolio  incorporating HK stocks.


2024 High Conviction Idea: The Case for a Rotation Out of Japan into Hong Kong - Part 3

Hong Kong

HK Electric Investments and HK Electric Investments Limited is a fixed single investment trust in Hong Kong with a focus on the power industry. The Trust is a vertically integrated power utility and its operations comprise the generation, transmission, distribution, and supply of electricity to Hong Kong Island and Lamma Island.

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HK Electric Investments (2638 HK)

Revisiting Hong Kong Utilities-Time to Sell?

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Downgrading Japan; Stay Defensive; Downgrading Outlook on Global Equities $ACWI to Neutral

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Vermilion Research

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Rikki Malik

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The Hong Kong market offers a favorable risk-reward ratio, suggesting a barbell strategy with high-beta and low volatility dividend stocks could...

Rikki Malik

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Revisiting Hong Kong Utilities-Time to Sell?

​Hong Kong utilities have outperformed this year, with future US interest rate cuts expected to provide further support. Revisiting our original...

Rikki Malik

Downgrading Japan; Stay Defensive; Downgrading Outlook on Global Equities $ACWI to Neutral

Downgrading Japan TOPIX, Nikkei; Stay Defensive; Downgrading Outlook on Global Equities $ACWI $EEM to Neutral; Many Risk-Off Signals increase odds...

Vermilion Research

Pullback Underway; Getting Defensive; Long-Term RS Bottoms for Defensives Is a Reason for Caution

Pullback Underway $ACWI $SPX; Getting Defensive; Long-Term RS Bottoms for Defensive Sectors is a Reason for Caution. Buys in Health Care,...

Vermilion Research

Opportunities in the Hong Kong Market

​Hong Kong market experiencing a capitulation event; high-dividend stocks offer stability, while any false breakdown is a signal to take higher...

Rikki Malik

2024 High Conviction Idea: The Case for a Rotation Out of Japan into Hong Kong - Part 3

​The Hong Kong market offers a favorable risk-reward ratio, suggesting a barbell strategy with high-beta and low volatility dividend stocks could...

Rikki Malik

Hong Kong utilities have outperformed this year, with future US interest rate cuts expected to provide further support. Revisiting our original...

Hong Kong market experiencing a capitulation event; high-dividend stocks offer stability, while any false breakdown is a signal to take higher...

The Hong Kong market offers a favorable risk-reward ratio, suggesting a barbell strategy with high-beta and low volatility dividend stocks could...