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

We are recommending a shift from developed international markets (EAFE) to emerging market equities, as the MSCI EM index is breaking topside resistance, the EM vs. EAFE ratio is bullishly inflecting, and the US dollar (DXY) exhibits signs of breaking down. Russia (RTS), Taiwan (TAIEX), and Brazil (Bovespa) are deserving of overweights in the EM realm, though China (MSCI China) appears to be bottoming as well -- add exposure. EM Sectors: Technology and Consumer Discretionary are leadership -- overweight. Communications is the next most attractive EM Sector thanks largely to improvement in Tencent (700-HK) -- add exposure. Lastly, Materials exhibits early signs of potential price and RS bottoms -- add selective exposure

We are recommending a shift from developed international markets (EAFE) to emerging market equities, as the MSCI EM index is breaking topside resistance, the EM vs. EAFE ratio is bullishly inflecting, and the US dollar (DXY) exhibits signs of breaking down. Russia (RTS), Taiwan (TAIEX), and Brazil (Bovespa) are deserving of overweights in the EM realm, though China (MSCI China) appears to be bottoming as well -- add exposure. EM Sectors: Technology and Consumer Discretionary are leadership -- overweight. Communications is the next most attractive EM Sector thanks largely to improvement in Tencent (700-HK) -- add exposure. Lastly, Materials exhibits early signs of potential price and RS bottoms -- add selective exposure

Emerging Market Economist, Emerginomics

Tatiana Orlova

Emerging Market Economist

Emerginomics

Cross Asset Strategy

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The recent softening of the Fed’s monetary stance and hopes that the US and China should reach a new trade agreement in March have boosted demand for EM currencies. We think that the Central Bank of Russia is one of those EM banks that may switch into an easing mode before the year is out. Besides, the oil market is in an upbeat mood again. Although the US is determined to impose further “biting” sanctions against Russia, a few months delay is likely due to the busy domestic agenda of the US Congress, and the current focus on more pressing issues. Given these conditions, we are bullish on the rouble in the short term. We are also expecting further gains by Russia’s OFZs and sovereign Eurobonds, especially if the oil rally continues.
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The recent softening of the Fed’s monetary stance and hopes that the US and China should reach a new trade agreement in March have boosted demand for EM currencies. We think that the Central Bank of Russia is one of those EM banks that may switch into an easing mode before the year is out. Besides, the oil market is in an upbeat mood again. Although the US is determined to impose further “biting” sanctions against Russia, a few months delay is likely due to the busy domestic agenda of the US Congress, and the current focus on more pressing issues. Given these conditions, we are bullish on the rouble in the short term. We are also expecting further gains by Russia’s OFZs and sovereign Eurobonds, especially if the oil rally continues.


Russian Assets to Benefit from Higher Oil Prices and Busy US Congressional Agenda

Thematic (Sector/Industry)

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In August, markets are notoriously prone to sharp moves owing to thin liquidity. On Wednesday 8 August, the rouble plunged as the markets digested a draft US bill aimed at the widening of the sanctions now in place against Russia. In today's trading session, its weakening continued on the US announcement of additional sanction plans.
If the US Congress and Senate approve the new bill undiluted, this should prompt further Russian sovereign debt sell-off and RUB weakening. However, given…
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In August, markets are notoriously prone to sharp moves owing to thin liquidity. On Wednesday 8 August, the rouble plunged as the markets digested a draft US bill aimed at the widening of the sanctions now in place against Russia. In today's trading session, its weakening continued on the US announcement of additional sanction plans.
If the US Congress and Senate approve the new bill undiluted, this should prompt further Russian sovereign debt sell-off and RUB weakening. However, given…


Rouble Dives as US Congress Publishes New Sanctions Bill

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

In this report, we screen for stocks that are largely avoided by global emerging market active funds. We identify companies within the MSCI Emerging Markets Index that are held underweight by EM active funds and by less than 3% of the active fund population.To test whether avoiding these stocks has been a good strategy, we create an 'EM Unloved' portfolio that contains all the stocks from the screen, rebalanced monthly and back-tested over the last 7 years.The results show a significant underperformance of EM Unloved stocks against the benchmark MSCI EM Index, and avoiding these stocks has clearly played a part in the long-term outperformance of EM active funds against the benchmark.  With an average of 26% of the MSCI EM index largely avoided by active EM investors, it questions the logic of broad-based index strategies when it comes to emerging market exposure.

In this report, we screen for stocks that are largely avoided by global emerging market active funds. We identify companies within the MSCI Emerging Markets Index that are held underweight by EM active funds and by less than 3% of the active fund population.To test whether avoiding these stocks has been a good strategy, we create an 'EM Unloved' portfolio that contains all the stocks from the screen, rebalanced monthly and back-tested over the last 7 years.The results show a significant underperformance of EM Unloved stocks against the benchmark MSCI EM Index, and avoiding these stocks has clearly played a part in the long-term outperformance of EM active funds against the benchmark.  With an average of 26% of the MSCI EM index largely avoided by active EM investors, it questions the logic of broad-based index strategies when it comes to emerging market exposure.

EM Managers: Most Avoided Stocks - 2018 Update

• The 830 stocks in the benchmark MSCI Emerging Market Index all represent legitimate investments for global EM active managers. Whilst publicly available top 10 fund holdings will highlight what EM funds are holding, it is more difficult to establish the stocks that EM funds are avoiding. • To find these stocks we limit the universe to the constituents of the MSCI EM index and screen for companies that are held by less than 3% of the fund population in our analysis (126 global EM active equity…

• The 830 stocks in the benchmark MSCI Emerging Market Index all represent legitimate investments for global EM active managers. Whilst publicly available top 10 fund holdings will highlight what EM funds are holding, it is more difficult to establish the stocks that EM funds are avoiding. • To find these stocks we limit the universe to the constituents of the MSCI EM index and screen for companies that are held by less than 3% of the fund population in our analysis (126 global EM active equity…

Russia

VTB Bank PJSC attracts deposits and offers corporate, retail, and investment banking services.  The Bank offers debt origination, trade financing and custody services, and trades in derivatives, commodities, money markets, Russian and international currency, equities, bonds, and repos.

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Vtb Bank Pjsc (VTBR RM)

Shift Exposure From EAFE to EM

We are recommending a shift from developed international markets (EAFE) to emerging market equities, as the MSCI EM index is breaking topside...

Vermilion Research

Russian Assets to Benefit from Higher Oil Prices and Busy US Congressional Agenda

The recent softening of the Fed’s monetary stance and hopes that the US and China should reach a new trade agreement in March have boosted demand...

Tatiana Orlova

Rouble Dives as US Congress Publishes New Sanctions Bill

In August, markets are notoriously prone to sharp moves owing to thin liquidity. On Wednesday 8 August, the rouble plunged as the markets digested...

Tatiana Orlova

EM Managers: Most Avoided Stocks - 2018 Update

In this report, we screen for stocks that are largely avoided by global emerging market active funds. We identify companies within the MSCI...

Steven Holden

EM Managers - Most Avoided Stocks

• The 830 stocks in the benchmark MSCI Emerging Market Index all represent legitimate investments for global EM active managers. Whilst publicly...

Steven Holden

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