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>Our outlook remains neutral on global equities (MSCI ACWI) as of our August 8, 2024 Int’l Compass, after being bullish since early-November 2023</li>
<li>As discussed since late-July, we believe we're still within a 4- to 6-month pullback/consolidation from our selected July 17 starting point, until the market decides which was this consolidation resolves </li>
<li>TOPIX is below 2740-2820 resistance. Europe is testing resistance, though near potential breakouts on the EURO STOXX 50, STOXX Europe 600, and STOXX Europe 50. Watch for false breakouts</li>
</ul>


Our outlook remains neutral on global equities (MSCI ACWI) as of our August 8, 2024 Int’l Compass, after being bullish since early-November 2023
As discussed since late-July, we believe we're still within a 4- to 6-month pullback/consolidation from our selected July 17 starting point, until the market decides which was this consolidation resolves 
TOPIX is below 2740-2820 resistance. Europe is testing resistance, though near potential breakouts on the EURO STOXX 50, STOXX Europe 600, and STOXX Europe 50. Watch for false breakouts


Japan and Europe Holding Below Resistance; MSCI ACWI, ACWI Ex-US, EAFE (Local Curr) Below Resistance

Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>The reason companies object to a reduction in the investment unit is the cost of shareholder relations, not the cost paid to the trust bank.</li>
<li>We should discuss whether it is better for the “unit of investment” principle to remain in place for the convenience of companies that want to pass company proposals smoothly.</li>
<li>It will be interesting to see if there will be a discussion on going back to basics and allowing single share holders to exercise their voting rights.</li>
</ul>


The reason companies object to a reduction in the investment unit is the cost of shareholder relations, not the cost paid to the trust bank.
We should discuss whether it is better for the “unit of investment” principle to remain in place for the convenience of companies that want to pass company proposals smoothly.
It will be interesting to see if there will be a discussion on going back to basics and allowing single share holders to exercise their voting rights.


Has the “Unit of Investment” Principle Spoiled the Companies?

<ul>
<li>Information asymmetries between shareholders/investors and board directors, between inside and outside board directors, between inside and outside statutory auditors, and between insiders and the rest are constant challenges.</li>
<li>Statutory auditors cannot be dismissed and have significant powers, including the right to investigate, and since statutory auditors are board members, they can attend and speak at board meetings.</li>
<li>To make statutory auditors function, establish a process for nominating statutory auditors, raise the compensation of outside auditors, and run an open board meeting where board members' comments are respected.</li>
</ul>


Information asymmetries between shareholders/investors and board directors, between inside and outside board directors, between inside and outside statutory auditors, and between insiders and the rest are constant challenges.
Statutory auditors cannot be dismissed and have significant powers, including the right to investigate, and since statutory auditors are board members, they can attend and speak at board meetings.
To make statutory auditors function, establish a process for nominating statutory auditors, raise the compensation of outside auditors, and run an open board meeting where board members' comments are respected.


How to Make a Non-Functioning Statutory Auditor Function

<ul>
<li>Last year's CAPEX plan was also a record high, but ROE growth was limited. We should closely monitor whether the allocation of CAPEX, shareholder returns, and retained earnings is appropriate.</li>
<li>When a company finally begins using cash on hand for investments and lacks reliable track records, it should be monitored to ensure that it’s generating sufficient cash flow from CAPEX.</li>
<li>The trend continues to remain that most investments are directed overseas. Note that many Japanese companies have a history of having difficulty managing their overseas operations.</li>
</ul>


Last year's CAPEX plan was also a record high, but ROE growth was limited. We should closely monitor whether the allocation of CAPEX, shareholder returns, and retained earnings is appropriate.
When a company finally begins using cash on hand for investments and lacks reliable track records, it should be monitored to ensure that it’s generating sufficient cash flow from CAPEX.
The trend continues to remain that most investments are directed overseas. Note that many Japanese companies have a history of having difficulty managing their overseas operations.


Focus on Cash Flow Recovery from Investments as Planned, as Well as Appropriate Cash Allocation

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

Rikki Malik

Thematic (Sector/Industry)

<ul>
<li>A review of recent events/data impacting our investment themes or outlook</li>
<li>We take a look at how some of the markets we focus on reacted to the aftermath of the Federal Reserve Decision.</li>
<li>China is watching key levels on the Shanghai Composite Index</li>
</ul>


A review of recent events/data impacting our investment themes or outlook
We take a look at how some of the markets we focus on reacted to the aftermath of the Federal Reserve Decision.
China is watching key levels on the Shanghai Composite Index


Japan

The TOPIX, also known as the Tokyo Stock Price Index, is a capitalization-weighted index of all companies listed on the First Section of the Tokyo Stock Exchange. The index is supplemented by the subindices of the 33 industry sectors. The index calculation excludes temporary issues and preferred stocks, and has a base value of 100 as of January 4, 1968.

TSE Tokyo Price Index TOPIX (TPX INDEX)

Japan and Europe Holding Below Resistance; MSCI ACWI, ACWI Ex-US, EAFE (Local Curr) Below Resistance

Japan and Europe Holding Below Resistance; MSCI ACWI, ACWI ex-US, and EAFE (local currency) Also Below Resistance Though Testing Now; $EEM breakout...

Vermilion Research

Has the “Unit of Investment” Principle Spoiled the Companies?

I would like to discuss the issues on the August 16 Nikkei article, “6% Favor Lowering Minimum Investment Unit in QUICK Short-Term Survey."

Metrical Inc

How to Make a Non-Functioning Statutory Auditor Function

I would like to discuss the issues raised in the article "Statutory Auditors: The Lost Weight in Japan.” published in the Nikkei Shimbun on August...

Metrical Inc

Focus on Cash Flow Recovery from Investments as Planned, as Well as Appropriate Cash Allocation

I would like to discuss the issues on the July 26 Nikkei article, ""CAPEX at 33 trillion yen, record high; Toyota tops the list for the first time."

Metrical Inc

Overview #9 Fallout from the Fed

A review of recent events/data impacting our investment themes and outlook. We look at the usual suspects of Gold, the JPY, Topix and the Hang...

Rikki Malik