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

In last week's Int'l Compass (Sept. 2), we highlighted emerging markets (EEM-US, Shanghai Comp) and Japan (TOPIX, TOPIX Small) as areas of bullish interest, with short-term bullish inflections suggesting the tide was turning in favor of these markets. This remains the focus in today's report, and especially on Japan; bullish price inflections and breakouts have started to proliferate, which suggests this could be the start of a broad-based rally for Japan in the weeks and months ahead.

In last week's Int'l Compass (Sept. 2), we highlighted emerging markets (EEM-US, Shanghai Comp) and Japan (TOPIX, TOPIX Small) as areas of bullish interest, with short-term bullish inflections suggesting the tide was turning in favor of these markets. This remains the focus in today's report, and especially on Japan; bullish price inflections and breakouts have started to proliferate, which suggests this could be the start of a broad-based rally for Japan in the weeks and months ahead.

Buy Japan On This Breakout ; TOPIX Breaking Out To 21-Year Highs; Actionable Theme: Growth Sectors

Taiwan Semiconductor (TSMC) / Technical Analysis

Emerging market equities have been one of the worst areas to invest in 2021, but we see early signs of positive change. With the US dollar failing to break above resistance at $93.50 and the MSCI EM ETF (EEM-US) displaying a false breakdown at $52, we believe now is an opportune time to add exposure to emerging market equities. To be clear, we are not getting overly bullish on EM; we have favored developed int’l (EAFE) over EM since May, and we are now shifting back to a neutral stance between the two. We see reason to believe the tide is shifting in EM’s favor. Below we highlight attractive and actionable themes within EM.

Emerging market equities have been one of the worst areas to invest in 2021, but we see early signs of positive change. With the US dollar failing to break above resistance at $93.50 and the MSCI EM ETF (EEM-US) displaying a false breakdown at $52, we believe now is an opportune time to add exposure to emerging market equities. To be clear, we are not getting overly bullish on EM; we have favored developed int’l (EAFE) over EM since May, and we are now shifting back to a neutral stance between the two. We see reason to believe the tide is shifting in EM’s favor. Below we highlight attractive and actionable themes within EM.

Shifting Exposure To Emerging Markets; Buying TSMC/Taiwan Semi, ICICI Bank, Many Others

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

After the relative success of last year's Partially Paid Rights Offer conducted by <a href="https://www.smartkarma.com/entities/reliance-industries-ltd" target="_blank" data-smartkarma-citation="entities:198:1" rel="noopener">Reliance Industries (RIL IN)</a> discussed in basics in <a href="https://www.smartkarma.com/insights/the-reliance-industries-ril-rights-offering" target="_blank" data-smartkarma-citation="insights:39307" rel="noopener">The Reliance Industries [RIL] Rights Offering</a> then in gory detail in <a href="https://www.smartkarma.com/insights/reliance-rights-offer-detailed-big-7bn-big-and-interesting" target="_blank" data-smartkarma-citation="insights:39448" rel="noopener">Reliance Rights Offer Detailed - Big. $7bn Big. And Interesting</a>, <a href="https://www.smartkarma.com/entities/bharti-airtel-ltd" target="_blank" data-smartkarma-citation="entities:953:1" rel="noopener">Bharti Airtel (BHARTI IN)</a> has decided to conduct a Partially Paid Offering of its own. Bharti Airtel, of course, also raised money in a 19 for 67 rights offering in May 2019 followed by a straight equity raise announced in December 2019 and executed in January 2020. On 30 August, Bharti Airtel <a href="https://www.bseindia.com/xml-data/corpfiling/AttachHis/A8DDC574-2296-4A04-9731-8B705D44607E-080745.pdf" target="_blank" rel="noopener">announced</a> that its board had met and approved a Rights Issue to fully-paid up shares which works with a construct called Partially Paid Shares. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/227/562/original/Screenshot+2021-09-02+at+11.46.59+PM.png?1630597694" class="editor-image img-responsive" data-smartkarma-image-id="227562"></figure></section>There are no details yet for the issue period, trading period, and record date but what we do know is that investors<ul>
<li>will get 1 Right for every 14 Shares held</li>
<li>will be entitled to purchase 1 Share at Rs 535/share (vs ~Rs 620/share on the 30th of August) for every Right (or Rights Entitlement ("RE")) that they receive</li>
<li>will only have to put up 25% of the funds in the initial stage (i.e. 25% of Rs 535 or Rs 133.75/share), then there will be subsequent capital calls over the following 36 months (vs 18 months for the Reliance version of the same.</li>
<li>will be able to subscribe for over-allotments to take up the rights of those who let theirs lapse.</li>
</ul>When will we know all the other important things like record date, trading period, etc?I expect it may not take long.Last year's Reliance Rights Entitlement to Partially Paid Shares saw the announcement on 30 April, with more details on the 13th of May 2020 and a record date the 14th, more details on Friday the 15th, then full details out on Sunday the 17th of May with Rights Issue Opening Date on the 20th of May, 6 days after Record Date. These Rights Entitlements situations are funkier than people think. And while they are going to be a tiny portion of one's portfolio, at receipt, there are some really cool aspects.As always, there is more below the fold.

After the relative success of last year's Partially Paid Rights Offer conducted by Reliance Industries (RIL IN) discussed in basics in The Reliance Industries [RIL] Rights Offering then in gory detail in Reliance Rights Offer Detailed - Big. $7bn Big. And Interesting, Bharti Airtel (BHARTI IN) has decided to conduct a Partially Paid Offering of its own. Bharti Airtel, of course, also raised money in a 19 for 67 rights offering in May 2019 followed by a straight equity raise announced in December 2019 and executed in January 2020. On 30 August, Bharti Airtel announced that its board had met and approved a Rights Issue to fully-paid up shares which works with a construct called Partially Paid Shares. There are no details yet for the issue period, trading period, and record date but what we do know is that investors
will get 1 Right for every 14 Shares held
will be entitled to purchase 1 Share at Rs 535/share (vs ~Rs 620/share on the 30th of August) for every Right (or Rights Entitlement ("RE")) that they receive
will only have to put up 25% of the funds in the initial stage (i.e. 25% of Rs 535 or Rs 133.75/share), then there will be subsequent capital calls over the following 36 months (vs 18 months for the Reliance version of the same.
will be able to subscribe for over-allotments to take up the rights of those who let theirs lapse.
When will we know all the other important things like record date, trading period, etc?I expect it may not take long.Last year's Reliance Rights Entitlement to Partially Paid Shares saw the announcement on 30 April, with more details on the 13th of May 2020 and a record date the 14th, more details on Friday the 15th, then full details out on Sunday the 17th of May with Rights Issue Opening Date on the 20th of May, 6 days after Record Date. These Rights Entitlements situations are funkier than people think. And while they are going to be a tiny portion of one's portfolio, at receipt, there are some really cool aspects.As always, there is more below the fold. 

Bharti Airtel Partially Paid Rights Situation

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

On 25 August, the Board of <a href="https://www.smartkarma.com/entities/bharti-airtel-ltd" target="_blank" data-smartkarma-citation="entities:953:1" rel="noopener">Bharti Airtel (BHARTI IN)</a> announced that they would be meeting on 29 August to consider various capital raising options through equity or equity linked or debt instruments or a combination thereof. The stock dropped 4.2% on 26 August and then gained 1.4% on 27 August.Last evening, <a href="https://www.smartkarma.com/entities/bharti-airtel-ltd" target="_blank" data-smartkarma-citation="entities:953:1" rel="noopener">Bharti Airtel (BHARTI IN)</a> announced a 1:14 rights issue (shareholders can subscribe to 1 share for every 14 shares they own) at INR 535/share to raise up to INR 21,000 crores (INR 210 bn; US$2.86bn). That is a 10.1% discount to the last close on the NSE.Subscribers to the issue will need to pay 25% on application and the balance will need to be paid in two additional calls within an overall time horizon of 36 months.The promoter and promoter group will subscribe to the full extent of their entitlement and will also subscribe to any unsubscribed shares in the issue.The record date has not been announced yet and a 'Special Committee of Directors' has been formed to decide other terms and conditions of the offer, including the issue period and record date.Given the small dilution, we do not expect the stock to trade a lot lower today. The stock could trade higher as investors that sold in size on Thursday and Friday re-enter the stock.<a href="https://www.smartkarma.com/entities/bharti-airtel-ltd" target="_blank" data-smartkarma-citation="entities:953:1" rel="noopener">Bharti Airtel (BHARTI IN)</a> has continued to gain subscribers at the expense of <a href="https://www.smartkarma.com/entities/vodafone-idea-ltd" target="_blank" data-smartkarma-citation="entities:15678:1" rel="noopener">Vodafone Idea (IDEA IN)</a> and the rights issue could help cement its position while helping pay the Adjusted Gross Revenue (AGR) dues.

On 25 August, the Board of Bharti Airtel (BHARTI IN) announced that they would be meeting on 29 August to consider various capital raising options through equity or equity linked or debt instruments or a combination thereof. The stock dropped 4.2% on 26 August and then gained 1.4% on 27 August.Last evening, Bharti Airtel (BHARTI IN) announced a 1:14 rights issue (shareholders can subscribe to 1 share for every 14 shares they own) at INR 535/share to raise up to INR 21,000 crores (INR 210 bn; US$2.86bn). That is a 10.1% discount to the last close on the NSE.Subscribers to the issue will need to pay 25% on application and the balance will need to be paid in two additional calls within an overall time horizon of 36 months.The promoter and promoter group will subscribe to the full extent of their entitlement and will also subscribe to any unsubscribed shares in the issue.The record date has not been announced yet and a 'Special Committee of Directors' has been formed to decide other terms and conditions of the offer, including the issue period and record date.Given the small dilution, we do not expect the stock to trade a lot lower today. The stock could trade higher as investors that sold in size on Thursday and Friday re-enter the stock.Bharti Airtel (BHARTI IN) has continued to gain subscribers at the expense of Vodafone Idea (IDEA IN) and the rights issue could help cement its position while helping pay the Adjusted Gross Revenue (AGR) dues.

Bharti Airtel's Large Partly Paid Rights Offering

External broker reports(aggregated public sources), SMC Global

SMC Online

External broker reports(aggregated public sources)

Equity Bottom-Up

Sales of Homes Service segment has gone up 12.90% to Rs 653.10 crore (accounting for 2.35% of total sales). Sales of Digital TV Services segment has gone up 8.67% to Rs 809.40 crore (accounting for 2.91% of total sales). Sales of Others segment has gone up...
<div class="content-highlight">Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</div>

Sales of Homes Service segment has gone up 12.90% to Rs 653.10 crore (accounting for 2.35% of total sales). Sales of Digital TV Services segment has gone up 8.67% to Rs 809.40 crore (accounting for 2.91% of total sales). Sales of Others segment has gone up...
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Bharti Airtel: Revenue up 15.3% YoY Due to Customer Addition and Improved Realization

India

Bharti Airtel Limited, a part of Bharti Enterprises, provides telecommunications services throughout India. The Company provides GSM Mobile Services, broadband, fixed line telephone services, long distance services (international & national) and enterprise services.

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Bharti Airtel (BHARTI IN)

Buy Japan On This Breakout ; TOPIX Breaking Out To 21-Year Highs; Actionable Theme: Growth Sectors

Japan (TOPIX, TOPIX Small) was a big focus for us last week, and it remains the focus in today's report; this could be the start of a broad-based...

Vermilion Research

Shifting Exposure To Emerging Markets; Buying TSMC/Taiwan Semi, ICICI Bank, Many Others

We see early signs of positive change within EM, and we present a strong case as to why we believe now is an opportune time to add exposure.

Vermilion Research

Bharti Airtel Partially Paid Rights Situation

Bharti Airtel is launching another rights issue - this time as a partially paid share issue which will grant investors rights to partially pay for...

Travis Lundy

Bharti Airtel's Large Partly Paid Rights Offering

Bharti Airtel has announced a US$2.8bn rights offer. This is a partly paid offering with 25% paid upfront and 2 calls within 36 months. Expect the...

Brian Freitas

Bharti Airtel: Revenue up 15.3% YoY Due to Customer Addition and Improved Realization

Sales of Homes Service segment has gone up 12.90% to Rs 653.10 crore (accounting for 2.35% of total sales). Sales of Digital TV Services segment...

SMC Online

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