Quantitative Equity Analyst, DMA

Charlotte van Tiddens, CFA

Quantitative Equity Analyst

Technology-First Company

DMA is a technology-first company that provides an end-to-end SaaS solution to institutional investors. DMA enables regulated entities like asset managers, wealth managers, investment managers and financial advisors to connect their front and back office, break silos and reduce headcount.

Event-Driven

<ul>
<li>JSE indices were rebalanced in the closing auction on Friday.</li>
<li>Turnover for the day on the JSE was R59.3bn, R44bn traded in the closing auction (74%).</li>
<li>Turnover at the December rebalance was R60bn, where around half traded in the closing auction.</li>
</ul>


JSE indices were rebalanced in the closing auction on Friday.
Turnover for the day on the JSE was R59.3bn, R44bn traded in the closing auction (74%).
Turnover at the December rebalance was R60bn, where around half traded in the closing auction.


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

<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.

<ul>
<li>The lows have likely been established for this correction, but a bottoming process would likely take weeks or potentially months and could come with more tests of the lows.</li>
<li>Japan's TOPIX and Nikkei 225 are each testing their respective downtrends. The EURO STOXX 50 is testing resistance in the 4040-4090 range. Germany's DAX is testing major resistance at 14,815-14,950.</li>
<li>It is likely that this initial 2-3 week bounce has run its course; stick with cyclical value and defensives, areas we have been focused on for most of 2022.</li>
</ul>


The lows have likely been established for this correction, but a bottoming process would likely take weeks or potentially months and could come with more tests of the lows.
Japan's TOPIX and Nikkei 225 are each testing their respective downtrends. The EURO STOXX 50 is testing resistance in the 4040-4090 range. Germany's DAX is testing major resistance at 14,815-14,950.
It is likely that this initial 2-3 week bounce has run its course; stick with cyclical value and defensives, areas we have been focused on for most of 2022.


Sticking With Cyclical Value and Defensives; Adding Large-Cap Japan Technology

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

Investec Group dedicates itself to banking (consumer, corporate, and investment) plus wealth management (73% and 25%, respectively, of Operating Profit) across South Africa (59% of Operating Income) and the UK (41% of Operating Income), backed by a robust Deposit base.AUM are growing forcefully: by 30% YoY. (32% expansion in South Africa and 26% in the UK). AUM is centred in the UK at £41.7bn while South Africa accounts for £16.7bn.FY21/20 results show mediocre trends as at other South African banks. The system is marked by flat top-line growth, OPEX restraint, mild erosion of CIR, lower rates impacting NIM/Spread lower, moderate deterioration in Asset Quality, reduced Provisioning, though Liquidity and Capital Adequacy are moving in the right direction.  A FV of 7%, a PBV of 0.59x, a Dividend Yield of 3.83%, and an Earnings Yield of 8.6% are not unappealing. INLis especially attractive based on the price paid by Standard Group to acquire Liberty (&gt;1x BV). <a href="https://senspdf.jse.co.za/documents/SENS_20210715_S448730.pdf" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://senspdf.jse.co.za/documents/SENS_20210715_S448730.pdf&amp;source=gmail&amp;ust=1626787764731000&amp;usg=AFQjCNHI7r1Ev3ceZPnvyjS0gbVe9VTWhg" rel="noopener">https://senspdf.jse.co.za/documents/SENS_20210715_S448730.pdf</a>The South African Deposit base is more or less rated in line with FirstRand which leaves the UK operation (47% of Deposits, 46% of Credit) valued at little or nothing.In addition, if the medium-term ROE targets are met, the current PBV of 0.59x is too low. Given that current ROE stands at 5%, management aims to hit 11-15% in the UK and 15-18% in South Africa over the next few years. This will come from efficiency gains from cost-cutting and greater digitalization/technology adoption. Even a pre-pandemic ROE of 12% puts shares on a PER of just 5x. We believe that the bank, as elsewhere in South Africa, is resilient. It has a diversified model. The bank is making progress on simplifying the structure of the operation by demerging Ninety-One and exiting its Australian business.

Investec Group dedicates itself to banking (consumer, corporate, and investment) plus wealth management (73% and 25%, respectively, of Operating Profit) across South Africa (59% of Operating Income) and the UK (41% of Operating Income), backed by a robust Deposit base.AUM are growing forcefully: by 30% YoY. (32% expansion in South Africa and 26% in the UK). AUM is centred in the UK at £41.7bn while South Africa accounts for £16.7bn.FY21/20 results show mediocre trends as at other South African banks. The system is marked by flat top-line growth, OPEX restraint, mild erosion of CIR, lower rates impacting NIM/Spread lower, moderate deterioration in Asset Quality, reduced Provisioning, though Liquidity and Capital Adequacy are moving in the right direction.  A FV of 7%, a PBV of 0.59x, a Dividend Yield of 3.83%, and an Earnings Yield of 8.6% are not unappealing. INLis especially attractive based on the price paid by Standard Group to acquire Liberty (&gt;1x BV). https://senspdf.jse.co.za/documents/SENS_20210715_S448730.pdfThe South African Deposit base is more or less rated in line with FirstRand which leaves the UK operation (47% of Deposits, 46% of Credit) valued at little or nothing.In addition, if the medium-term ROE targets are met, the current PBV of 0.59x is too low. Given that current ROE stands at 5%, management aims to hit 11-15% in the UK and 15-18% in South Africa over the next few years. This will come from efficiency gains from cost-cutting and greater digitalization/technology adoption. Even a pre-pandemic ROE of 12% puts shares on a PER of just 5x. We believe that the bank, as elsewhere in South Africa, is resilient. It has a diversified model. The bank is making progress on simplifying the structure of the operation by demerging Ninety-One and exiting its Australian business.

Investec Group: Deposit Base and Book Value Do Not Reflect Medium-Term Targets

South Africa

Investec Limited is an international investment and private banking group. The Group provides corporate and investment banking, private banking, securities trading, asset management, property trading and management and trade finance services.  Dually-listed company with INVP LN.

Investec Ltd (INL SJ)

JSE Mar24 Rebalance: Auction Analytics

JSE indices were rebalanced in the closing auction on Friday. Turnover for the day on the JSE was R59.3bn, R44bn traded in the closing auction (74%).

DMA

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

Sticking With Cyclical Value and Defensives; Adding Large-Cap Japan Technology

Sticking With Cyclical Value & Defensives; Adding Large-Cap Japan Technology. 2-3 week bounce has likely run its course with $TOPIX $Nikkei 225,...

Vermilion Research

Investec Group: Deposit Base and Book Value Do Not Reflect Medium-Term Targets

INL is undervalued based on its medium-term targets for Profitability and interrelated Efficiency. Stands out in South Africa. Benefits too from a...

Paul Hollingworth