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

MSCI Emerging Markets Index / Technical Analysis

<p>As we highlighted in last week’s <em>Int’l Compass</em>, the weight of the evidence suggests commodities are in the early stages of a new secular bull market. Global <strong>Materials </strong>remains a favorite Sector overweight and we believe outperformance is likely to continue considering the Sector’s long-term bullish RS reversal. Additionally, we are upgrading equal-weighted <strong>Energy </strong>to overweight due to bullish price and RS inflections -- add exposure with a focus on small- and mid-caps.</p>

As we highlighted in last week’s Int’l Compass, the weight of the evidence suggests commodities are in the early stages of a new secular bull market. Global Materials remains a favorite Sector overweight and we believe outperformance is likely to continue considering the Sector’s long-term bullish RS reversal. Additionally, we are upgrading equal-weighted Energy to overweight due to bullish price and RS inflections -- add exposure with a focus on small- and mid-caps.

Global Commodity-Related Equity Sectors In Secular Bull

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

<p>Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.</p><ul><li><a href='#lucror-entity-18387'>CIFI Holdings</a></li><li><a href='#lucror-entity-14882'>Seazen (Formerly Future Land)</a></li><li><a href='#lucror-entity-4153'>Shui On Land</a></li><li><a href='#lucror-entity-216'>Tata Motors Ltd</a></li><li><a href='#lucror-entity-22202'>Vedanta Resources</a></li></ul>

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.CIFI HoldingsSeazen (Formerly Future Land)Shui On LandTata Motors LtdVedanta Resources

Morning Views Asia: CIFI Holdings, Seazen (Formerly Future Land), Shui On Land, Tata Motors Ltd

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>Just over four weeks ago on 8 December 2020, <a href="https://www.smartkarma.com/entities/vedanta-resources-limited" target="_blank" data-smartkarma-citation="entities:22202:1" rel="noopener">Vedanta Resources (VED LN)</a> promoter Anil Agarwal was on <a href="https://www.moneycontrol.com/news/business/india-will-grow-phenomenally-well-hereon-says-vedantas-anil-agarwal-6208991.html" target="_blank" rel="noopener">CNBC-TV18 in India saying</a> that the promoter (Vedanta Resources, himself, the associated companies) had no plans at all to increase their stake in VEDL and no plans to make an open offer. He said the same in an <a href="https://www.timesnownews.com/business-economy/companies/article/no-plans-to-increase-stake-in-vedanta-currently-anil-agarwal/693270" target="_blank" rel="noopener">interview</a> with ETNow on 10-11 December. </p><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/867/original/Screenshot+2021-01-11+at+11.32.36+AM.png?1610336005" class="editor-image img-responsive" data-smartkarma-image-id="181867"></figure></section><p>Eight trading days later, they launched an off-market purchase to buy 4.98% of shares outstanding - the effective limit in any given fiscal year - to buy shares at a price between INR 150.45-160.00. This was discussed in <a href="https://www.smartkarma.com/insights/vedanta-promoter-launches-offer-to-buy-4-98" target="_blank" data-smartkarma-citation="insights:46600" rel="noopener">Vedanta Promoter Launches Offer to Buy 4.98%</a>. Early reports were they got less than 5%, and had to pay the top price to get that bit, but the 13D filed on 24 December suggests they got to <span id="ciqct_0_s">2,048,458,132 shares which is 55.1% which was what they were looking to do</span>.</p>
<p>Then the shares went up some more. They immediately went above INR 160, then went higher. </p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/879/original/Screenshot+2021-01-11+at+1.57.17+PM.png?1610345200" class="editor-image img-responsive" data-smartkarma-image-id="181879"></figure><p></p></section></section><p>Less than a week after making that purchase, local media (Economic Times and others) were mentioning the possibility (from "sources") that Vedanta Resources might come back with an Open Offer for another 10%. </p><p>Since the new year, the shares have popped further, likely in response to sharply higher commodity prices and a sharply higher share price for <a href="https://www.smartkarma.com/entities/hindustan-zinc-ltd" target="_blank" data-smartkarma-citation="entities:8688:1" rel="noopener">Hindustan Zinc (HZ IN)</a>, which rallied from Rs 240/share at year-end to above Rs 300/share in the first week of the year. </p><div class="content-highlight">
<h2>The NEW News</h2>
<p>On 9 January 2021, <a href="https://www.smartkarma.com/entities/vedanta-resources-limited" target="_blank" data-smartkarma-citation="entities:22202:1" rel="noopener">Vedanta Resources (VED LN)</a> released an <a href="https://www.bseindia.com/xml-data/corpfiling/AttachLive/B5B266CE-05B4-4E0B-9498-F913F67903B3-191702.pdf" target="_blank" rel="noopener">announcement</a> that it would launch a Voluntary Open Offer to purchase an additional 371,750,500 shares (10% of shares out) of <a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd (VEDL IN)</a> at Rs. 160/share, spending about US$800mm to get there. </p>
</div><p>A Detailed Public Statement ("DPS") will be released on or about 15 January. This starts a two-month-plus process leading to a two-week Open Offer, likely to take place starting in the second half of March. </p><p>More on what this means, how it could play out, etc, below the fold. </p>

Just over four weeks ago on 8 December 2020, Vedanta Resources (VED LN) promoter Anil Agarwal was on CNBC-TV18 in India saying that the promoter (Vedanta Resources, himself, the associated companies) had no plans at all to increase their stake in VEDL and no plans to make an open offer. He said the same in an interview with ETNow on 10-11 December. Eight trading days later, they launched an off-market purchase to buy 4.98% of shares outstanding - the effective limit in any given fiscal year - to buy shares at a price between INR 150.45-160.00. This was discussed in Vedanta Promoter Launches Offer to Buy 4.98%. Early reports were they got less than 5%, and had to pay the top price to get that bit, but the 13D filed on 24 December suggests they got to 2,048,458,132 shares which is 55.1% which was what they were looking to do.
Then the shares went up some more. They immediately went above INR 160, then went higher. 
Less than a week after making that purchase, local media (Economic Times and others) were mentioning the possibility (from "sources") that Vedanta Resources might come back with an Open Offer for another 10%. Since the new year, the shares have popped further, likely in response to sharply higher commodity prices and a sharply higher share price for Hindustan Zinc (HZ IN), which rallied from Rs 240/share at year-end to above Rs 300/share in the first week of the year. 
The NEW News
On 9 January 2021, Vedanta Resources (VED LN) released an announcement that it would launch a Voluntary Open Offer to purchase an additional 371,750,500 shares (10% of shares out) of Vedanta Ltd (VEDL IN) at Rs. 160/share, spending about US$800mm to get there. 
A Detailed Public Statement ("DPS") will be released on or about 15 January. This starts a two-month-plus process leading to a two-week Open Offer, likely to take place starting in the second half of March. More on what this means, how it could play out, etc, below the fold. 

Vedanta (VEDL IN) Promoter To Launch an Open Offer To Buy More

<p>The number of major country indexes showing major bullish inflections continues to grow. Broad commodities (Bloomberg Commodity index) also display a bullish reversal topside a 12.5-year downtrend. This type of evidence helps affirm our bullish outlook and suggests higher prices are ahead. Continue to add exposure on pullbacks.</p>

The number of major country indexes showing major bullish inflections continues to grow. Broad commodities (Bloomberg Commodity index) also display a bullish reversal topside a 12.5-year downtrend. This type of evidence helps affirm our bullish outlook and suggests higher prices are ahead. Continue to add exposure on pullbacks.

Long-Term Bullish Inflections For Hang Seng, DAX, MSCI EM, & Bloomberg Commodity Index

<p><br/> This month, we review the developments of 2020, an extraordinary year from an investor’s perspective, and give our outlook for the year ahead. <br/><br/> The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors' understanding of the Asian USD high-yield market. <br/></p>

  This month, we review the developments of 2020, an extraordinary year from an investor’s perspective, and give our outlook for the year ahead.    The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors' understanding of the Asian USD high-yield market.  

Asia HY Monthly - 2020 In Review And 2021 Outlook - Lucror Analytics

India

Vedanta Resources Limited operates as a diversified natural resource company. The Company extracts and process zinc, lead, aluminum, iron ore, copper, and silver, as well as focuses on oil and natural gas. Vedanta Resources serves clients worldwide.

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Vedanta Resources (VED LN)

Morning Views Asia: CIFI Holdings, Seazen (Formerly Future Land), Shui On Land, Tata Motors Ltd

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics

Vedanta (VEDL IN) Promoter To Launch an Open Offer To Buy More

Vedanta Resources just bought 5% of VEDL at INR 160. They are now going for another 10% at INR 160/share. VEDL Investors are long a virtual put,...

Travis Lundy

Long-Term Bullish Inflections For Hang Seng, DAX, MSCI EM, & Bloomberg Commodity Index

The number of major country indexes showing major bullish inflections continues to grow. Broad commodities also breaking a 12.5-year downtrend....

Vermilion Research

Asia HY Monthly - 2020 In Review And 2021 Outlook - Lucror Analytics

This month, we review the developments of 2020, an extraordinary year from an investor’s perspective, and give our outlook for the year ahead. ...

Lucror Analytics

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Global Commodity-Related Equity Sectors In Secular Bull

We believe commodities are in the early stages of a new secular bull market. Global Materials & Energy remain our favorite Sector overweights - add...

Vermilion Research

Morning Views Asia: CIFI Holdings, Seazen (Formerly Future Land), Shui On Land, Tata Motors Ltd

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics

Vedanta (VEDL IN) Promoter To Launch an Open Offer To Buy More

Vedanta Resources just bought 5% of VEDL at INR 160. They are now going for another 10% at INR 160/share. VEDL Investors are long a virtual put,...

Travis Lundy

Long-Term Bullish Inflections For Hang Seng, DAX, MSCI EM, & Bloomberg Commodity Index

The number of major country indexes showing major bullish inflections continues to grow. Broad commodities also breaking a 12.5-year downtrend....

Vermilion Research

Asia HY Monthly - 2020 In Review And 2021 Outlook - Lucror Analytics

This month, we review the developments of 2020, an extraordinary year from an investor’s perspective, and give our outlook for the year ahead. ...

Lucror Analytics