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

• Pullback opportunities are prevalent in Europe and Japan. Both markets are testing key support levels, presenting attractive entry points. We see little reason to abandon our bullish outlooks for both markets... see page 2• Overweight Materials Sector. We highlight actionable names within the materials sector as global miners continue to emerge from base patterns, most of which still yield attractive entry points, including Vale (VALE) and Rio Tinto (RIO-GB)... see pages 3-5• Opportunities in China. This week we highlight attractive set-ups in China.  Highlighted charts range from Baidu (BIDU) and Bank of China (3988-HK) to Fosun (656-HK) and China Southern Airlines (1055-HK)... see pages 6-8

• Pullback opportunities are prevalent in Europe and Japan. Both markets are testing key support levels, presenting attractive entry points. We see little reason to abandon our bullish outlooks for both markets... see page 2• Overweight Materials Sector. We highlight actionable names within the materials sector as global miners continue to emerge from base patterns, most of which still yield attractive entry points, including Vale (VALE) and Rio Tinto (RIO-GB)... see pages 3-5• Opportunities in China. This week we highlight attractive set-ups in China.  Highlighted charts range from Baidu (BIDU) and Bank of China (3988-HK) to Fosun (656-HK) and China Southern Airlines (1055-HK)... see pages 6-8

EM Is Cementing Its Leadership Status; Buy Miners

In the attached strategy document we expand upon themes and opportunities in materials, technology and financials as well as an overview of opportunities in EM, Europe, and Japan.Emerging Markets: Breaking out to all-time highs, EM is unfolding as global leadership. Take advantage of pullbacks.Europe: Two words: pullback opportunity. For the past three months, Europe peeled back from the global advance, as prices diverged from bullish headlines. We view this as a welcomed event. Long-term technicals do confirm the improving headlines, but timing matters. And the STOXX 600’s test of the 200-day MA represents a timely entry point.  Just note, Europe is not a relative leader. That status belongs to EM (above).Japan: Japan represents an overlooked opportunity. With EM leading, and Europe crowding headlines, Japan is steadily emerging from a two-year base pattern, setting the stage for another leg higher

In the attached strategy document we expand upon themes and opportunities in materials, technology and financials as well as an overview of opportunities in EM, Europe, and Japan.Emerging Markets: Breaking out to all-time highs, EM is unfolding as global leadership. Take advantage of pullbacks.Europe: Two words: pullback opportunity. For the past three months, Europe peeled back from the global advance, as prices diverged from bullish headlines. We view this as a welcomed event. Long-term technicals do confirm the improving headlines, but timing matters. And the STOXX 600’s test of the 200-day MA represents a timely entry point.  Just note, Europe is not a relative leader. That status belongs to EM (above).Japan: Japan represents an overlooked opportunity. With EM leading, and Europe crowding headlines, Japan is steadily emerging from a two-year base pattern, setting the stage for another leg higher

Global Equity Strategy: Overweight EM, Pullback Opportunities in Europe, Japan Poised to Breakout

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Equity Bottom-Up

Aluminum Corporation Of China / Equity Bottom-Up

No-moat Aluminum Corporation of China, or Chalco, reported 2016 net profit of CNY 402 million, a significant improvement from 2015’s CNY 149 million and was in line with management guidance. Nevertheless, excluding nonrecurring items, the firm still made a core loss of CNY 364 million. On a positive note, Chalco achieved a core net profit of CNY 504 million in the fourth quarter of 2016 due to improving aluminum prices and effective cost control. We have previously assumed in our base-case scenario that Chalco will be loss-making during our explicit five-year forecast period. After raising our near-term estimates for aluminum price and taking into account the company’s cost reduction efforts, we are now expecting the firm to turn profitable.We raise our fair value estimate to HKD 0.93 per share (from HKD 0.80). However, we believe Chalco remains overvalued as our bearish long-term aluminum price forecast remains unchanged.Analyst: Chokwai Lee

No-moat Aluminum Corporation of China, or Chalco, reported 2016 net profit of CNY 402 million, a significant improvement from 2015’s CNY 149 million and was in line with management guidance. Nevertheless, excluding nonrecurring items, the firm still made a core loss of CNY 364 million. On a positive note, Chalco achieved a core net profit of CNY 504 million in the fourth quarter of 2016 due to improving aluminum prices and effective cost control. We have previously assumed in our base-case scenario that Chalco will be loss-making during our explicit five-year forecast period. After raising our near-term estimates for aluminum price and taking into account the company’s cost reduction efforts, we are now expecting the firm to turn profitable.We raise our fair value estimate to HKD 0.93 per share (from HKD 0.80). However, we believe Chalco remains overvalued as our bearish long-term aluminum price forecast remains unchanged.Analyst: Chokwai Lee

Chalco Cutting Costs on All Fronts; Shares Remain Overvalued

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Thematic (Sector/Industry)

For those with the time and inclination, I have provided links to the Work Report (given by the Premier), the NDRC Draft Plan for National Economic and Social Development, and the Ministry of Finance Budget Report (previous year and plan for current year)  provided for Deputies to vote upon at the "Two Sessions" meetings of the National People's Congress (since 2000).Often, reading these reports is a somniferous affair. But they can hint at slight changes in priorities.I expect we will see much…

For those with the time and inclination, I have provided links to the Work Report (given by the Premier), the NDRC Draft Plan for National Economic and Social Development, and the Ministry of Finance Budget Report (previous year and plan for current year)  provided for Deputies to vote upon at the "Two Sessions" meetings of the National People's Congress (since 2000).Often, reading these reports is a somniferous affair. But they can hint at slight changes in priorities.I expect we will see much…

NPC17: National People's Congress Reports

Information Technology Consultant

Ishita Jain

As per the Financial Times ("FT") <a href="https://www.ft.com/content/4f88cb60-f8f7-11e6-bd4e-68d53499ed71" target="_blank">article</a> dated 24th Feb 2017, electric vehicle ("EVs") manufacturers and battery producers have been scrambling to secure supplies of Cobalt. This has been driven by the fact the a handful of hedge funds have purchased and stored Cobalt on expectations that the demand for EVs will pick up. Battery producers such as Panasonic, who supply Lithium Ion ("Li-ion") batteries to the likes of Tesla are hard pressed for supplies. As FT reported, prices have risen by more…

As per the Financial Times ("FT") article dated 24th Feb 2017, electric vehicle ("EVs") manufacturers and battery producers have been scrambling to secure supplies of Cobalt.   This has been driven by the fact the a handful of hedge funds have purchased and stored Cobalt on expectations that the demand for EVs will pick up. Battery producers such as Panasonic, who supply Lithium Ion ("Li-ion") batteries to the likes of Tesla are hard pressed for supplies.  As FT reported, prices have risen by more…

China

Aluminum Corporation of China Limited, also known as Chalco, is a producer of alumina and primary aluminum in China. The Company refines bauxite into alumina and smelts alumina to produce primary aluminum.

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Aluminum Corporation Of China (2600 HK)

EM Is Cementing Its Leadership Status; Buy Miners

• Pullback opportunities are prevalent in Europe and Japan. Both markets are testing key support levels,presenting attractive entry points. We see...

Vermilion Research

Global Equity Strategy: Overweight EM, Pullback Opportunities in Europe, Japan Poised to Breakout

In the attached strategy document we expand upon themes and opportunities in materials, technology and financials as well as an overview of...

Vermilion Research

Chalco Cutting Costs on All Fronts; Shares Remain Overvalued

No-moat Aluminum Corporation of China, or Chalco, reported 2016 net profit of CNY 402 million, a significant improvement from 2015’s CNY 149...

Morningstar, Inc.

NPC17: National People's Congress Reports

For those with the time and inclination, I have provided links to the Work Report (given by the Premier), the NDRC Draft Plan for National Economic...

Travis Lundy

Future of Cobalt Vis-A-Vis EVs

As per the Financial Times ("FT") article dated 24th Feb 2017, electric vehicle ("EVs") manufacturers and battery producers have been scrambling to...

Ishita Jain

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