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

Our cautious outlook and expectation for continued downward consolidation for global equities remains intact. Broad global indexes (MSCI ACWI, ACWI ex-U.S., EAFE, and EM) are all trading within patterns of lower highs and lower lows, leading us to believe the most likely scenario is that this near-term bounce is likely nothing more than a countertrend rally before longer-term downtrends reassert themselves. The one bright spot is EM.  In this report we highlight a number of attractive set-ups within the Financial, Communication, Engineering &amp; Construction, and Transportation Sectors.

Our cautious outlook and expectation for continued downward consolidation for global equities remains intact. Broad global indexes (MSCI ACWI, ACWI ex-U.S., EAFE, and EM) are all trading within patterns of lower highs and lower lows, leading us to believe the most likely scenario is that this near-term bounce is likely nothing more than a countertrend rally before longer-term downtrends reassert themselves. The one bright spot is EM.  In this report we highlight a number of attractive set-ups within the Financial, Communication, Engineering &amp; Construction, and Transportation Sectors.

Global Equity Strategy: Bearish with the Exception of EM.

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

The South African banking sector is an independently regulated market with an appealing market structure. However, serious political, economic, and social challenges and risks remain. Another ratings downgrade would test South Africa’s banks somewhat but will not undermine their resilience given their track record in managing complexities and risks. High capital buffers, sound regulation and supervision have helped mitigate risks at home. Opportunities are evolving at the main banks in less financialised Pan-African markets.<a href="https://www.smartkarma.com/entities/24988" target="_blank" data-smartkarma-citation="entities:24988:1">Standard Bank Group Ltd (SBK SJ)</a> is the South African lender that impresses most at this juncture. This is a quality EM bank. Results in 2017 show stellar fundamental momentum.  Standard’s PH Score™ was one of the highest globally, a strong quintile 1 performance, and bettered that of Nedbank (also improving) and FirstRand (disappointing).<div class="content-highlight">The PH Score™ is a fundamental momentum-quantamental score that scores banks according to changes in value-quality. The Score encompasses Profitability, Operating Efficiency, Liquidity, Capital, Asset Quality, and Coverage. Scores lie between 0 and 10, with higher scores representing more positive signs. Standard scores 9.1.</div>Boosted by less political negativity at home, and hopes of a more reform-minded government, shares have had a strong run of late and should be considered on any weakness emanating from political complexities and/or a negative ratings assessment. Bank shares have fluctuated with sovereign downgrades, Pravingate, Steinhoff, and ANC machinations.Already commanding positive “jaws” (revenue growth minus expenses growth) and a high ROE, we believe that Standard will extract greater efficiencies and profitability moving forward. The Balance Sheet is highly robust and liquid. Consumer credit in South Africa is severely depressed by historical levels after a prolonged deleveraging phase, and can revive over the medium-term. Growth especially across Africa (30% of earnings) offers upside/potential.The stellar PH Score™ at Standard signifies a strong share price performance over the next 12 months - especially if the “Ramaphosa bounce” has legs.

The South African banking sector is an independently regulated market with an appealing market structure. However, serious political, economic, and social challenges and risks remain. Another ratings downgrade would test South Africa’s banks somewhat but will not undermine their resilience given their track record in managing complexities and risks. High capital buffers, sound regulation and supervision have helped mitigate risks at home. Opportunities are evolving at the main banks in less financialised Pan-African markets.Standard Bank Group Ltd (SBK SJ) is the South African lender that impresses most at this juncture. This is a quality EM bank. Results in 2017 show stellar fundamental momentum.  Standard’s PH Score™ was one of the highest globally, a strong quintile 1 performance, and bettered that of Nedbank (also improving) and FirstRand (disappointing).The PH Score™ is a fundamental momentum-quantamental score that scores banks according to changes in value-quality. The Score encompasses Profitability, Operating Efficiency, Liquidity, Capital, Asset Quality, and Coverage. Scores lie between 0 and 10, with higher scores representing more positive signs. Standard scores 9.1.Boosted by less political negativity at home, and hopes of a more reform-minded government, shares have had a strong run of late and should be considered on any weakness emanating from political complexities and/or a negative ratings assessment. Bank shares have fluctuated with sovereign downgrades, Pravingate, Steinhoff, and ANC machinations.Already commanding positive “jaws” (revenue growth minus expenses growth) and a high ROE, we believe that Standard will extract greater efficiencies and profitability moving forward. The Balance Sheet is highly robust and liquid. Consumer credit in South Africa is severely depressed by historical levels after a prolonged deleveraging phase, and can revive over the medium-term. Growth especially across Africa (30% of earnings) offers upside/potential.The stellar PH Score™ at Standard signifies a strong share price performance over the next 12 months - especially if the “Ramaphosa bounce” has legs.

South Africa

Standard Bank Group Limited is an African integrated financial services group offering a full range of banking and related financial services. The Bank provides services in transactional banking, saving, borrowing, lending, investment, insurance, risk management, wealth management, and advisory services.

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Standard Bank (SBK SJ)

Global Equity Strategy: Bearish with the Exception of EM.

Our cautious outlook and expectation for continued downward consolidation for global equities remains intact. Broad global indexes (MSCI ACWI, ACWI...

Vermilion Research

Standard Bank: Standard Practice

The South African banking sector is an independently regulated market with an appealing market structure. However, serious political, economic, and...

Paul Hollingworth

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