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>Market dynamics remain largely constructive and we are now seeing meaningful improvement within emerging markets (EEM-US) as the Hang Seng index displays bullish price and relative strength (RS) reversals.</li>
<li>Brent and WTI crude oil are hitting 8-year highs, base metals are bullishly inflecting, and critical supports are holding on the broad global indexes.</li>
<li>Sticking with the theme from last week when we recommended Energy and Financials, two more Sectors that stand to benefit from rising rates include Materials and Industrials/Manufacturing -- add exposure.</li>
</ul>


Market dynamics remain largely constructive and we are now seeing meaningful improvement within emerging markets (EEM-US) as the Hang Seng index displays bullish price and relative strength (RS) reversals.
Brent and WTI crude oil are hitting 8-year highs, base metals are bullishly inflecting, and critical supports are holding on the broad global indexes.
Sticking with the theme from last week when we recommended Energy and Financials, two more Sectors that stand to benefit from rising rates include Materials and Industrials/Manufacturing -- add exposure.


Sticking With Value; Buying Materials & Industrials

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The spread on the BHP PLC/Limited arbitrage has widened as stock borrow on the AU line has dried up ahead of the ex-date for the General Meeting</li>
<li>An analysis of the shareholder register of BHP Group PLC suggests that BHP has mis-underestimated the passive ownership of PLC by a lot.</li>
<li>All told, on a NET basis, the 28th of January is likely to be a US$40bn index event (two way, both names, both funding trades). Another $10-15bn rolls within index.</li>
</ul>


The spread on the BHP PLC/Limited arbitrage has widened as stock borrow on the AU line has dried up ahead of the ex-date for the General Meeting
An analysis of the shareholder register of BHP Group PLC suggests that BHP has mis-underestimated the passive ownership of PLC by a lot.
All told, on a NET basis, the 28th of January is likely to be a US$40bn index event (two way, both names, both funding trades). Another $10-15bn rolls within index.


BHP Unification - Trading and Spread Update

David Blennerhassett

<ul>
<li>
<a href="https://www.smartkarma.com/entities/crown-resorts-ltd" target="_blank" data-smartkarma-citation="entities:808:1" rel="noopener">Crown Resorts (CWN AU)</a> backs Blackstone's revised Offer of A$13.10/share in cash, from A$12.50 previously, and up from A$11.85/share initially.  </li>
<li>The endgame approaches for the <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP (BHP AU)</a> Unification trade. S&amp;P announced the S&amp;P/ASX upweight would be one-shot, as expected. Regulatory approvals are in. SARB has set BHP SJ as "domestic."</li>
<li>The Offeror slashes the Offer price for <a href="https://www.smartkarma.com/entities/51-job-inc-adr" target="_blank" data-smartkarma-citation="entities:532:1" rel="noopener">51 Job (JOBS US)</a> by 27.6%, however, it's not clear how the new deal terms sidestep the regulator nor justify a reduction. </li>
</ul>



Crown Resorts (CWN AU) backs Blackstone's revised Offer of A$13.10/share in cash, from A$12.50 previously, and up from A$11.85/share initially.  
The endgame approaches for the BHP (BHP AU) Unification trade. S&amp;P announced the S&amp;P/ASX upweight would be one-shot, as expected. Regulatory approvals are in. SARB has set BHP SJ as "domestic."
The Offeror slashes the Offer price for 51 Job (JOBS US) by 27.6%, however, it's not clear how the new deal terms sidestep the regulator nor justify a reduction. 


Last Week in Event SPACE: BHP Group, Crown Resorts, 51job, Hitachi, Razer Inc

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<ul>
<li>As expected, S&amp;P DJI have announced that <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a>'s weight in the S&amp;P/ASX indices will be increased all at once at the close of trading on 28 January. </li>
<li>We estimated passive S&amp;P/ASX trackers will need to buy over A$4bn of <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a> leading to a funding sell of that size on the other index constituents.</li>
<li>
<a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a> has risen 25% from its lows in November. We expect most UK shareholders have finished selling shares and the one-shot inclusion could take the stock higher.</li>
</ul>


As expected, S&amp;P DJI have announced that BHP Group (BHP AU)'s weight in the S&amp;P/ASX indices will be increased all at once at the close of trading on 28 January. 
We estimated passive S&amp;P/ASX trackers will need to buy over A$4bn of BHP Group (BHP AU) leading to a funding sell of that size on the other index constituents.

BHP Group (BHP AU) has risen 25% from its lows in November. We expect most UK shareholders have finished selling shares and the one-shot inclusion could take the stock higher.


BHP Unification - ASX Upweight in One Shot

<ul>
<li>There could be 2 changes to the ASX100 and ASX200 prior to the March rebalance due to the acquisitions of <a href="https://www.smartkarma.com/entities/ausnet-services" target="_blank" data-smartkarma-citation="entities:10293:1" rel="noopener">Ausnet Services (AST AU)</a> and <a href="https://www.smartkarma.com/entities/sydney-airport" target="_blank" data-smartkarma-citation="entities:19063:1" rel="noopener">Sydney Airport (SYD AU)</a>. </li>
<li>There will also be the large <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a> upweight and funding trade following unification, and possibly the <a href="https://www.smartkarma.com/entities/afterpay-limited" target="_blank" data-smartkarma-citation="entities:26940:1" rel="noopener">Afterpay Touch (APT AU)</a> acquisition by <a href="https://www.smartkarma.com/entities/square-inc" target="_blank" data-smartkarma-citation="entities:23755:1" rel="noopener">Square Inc (SQ US)</a>. </li>
<li>Then there will be more changes to the ASX200 and ASX300 at the March rebalance. There could be a lot of new listings included in the ASX300.</li>
</ul>


There could be 2 changes to the ASX100 and ASX200 prior to the March rebalance due to the acquisitions of Ausnet Services (AST AU) and Sydney Airport (SYD AU). 
There will also be the large BHP Group (BHP AU) upweight and funding trade following unification, and possibly the Afterpay Touch (APT AU) acquisition by Square Inc (SQ US). 
Then there will be more changes to the ASX200 and ASX300 at the March rebalance. There could be a lot of new listings included in the ASX300.


ASX100/​200/300 Index Rebalance Preview (March 2022): A Lot Happening From Now to March

Australia

BHP Billiton Limited is an international resources company.  The Company's principal business lines are mineral exploration and production, including coal, iron ore, gold, titanium, ferroalloys, nickel and copper concentrate, as well as petroleum exploration, production, and refining.  Dually-listed company with BLT LN.

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BHP Group Ltd (BHP US)

Sticking With Value; Buying Materials & Industrials

Sticking with the theme from last week when we recommended Energy and Financials, two more Sectors that stand to benefit from rising rates include...

Vermilion Research

BHP Unification - Trading and Spread Update

The BHP Unification Trade is a big one. I expect that the "mandated" index sell of BHP LN and reverse funding trade are US$13bn a side, the BHP AU...

Travis Lundy

Last Week in Event SPACE: BHP Group, Crown Resorts, 51job, Hitachi, Razer Inc

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

BHP Unification - ASX Upweight in One Shot

The BHP upweight in the ASX indices will be done all at once at the close on 28 January. This will mean A$4bn of BHP to buy and a funding sell on...

Brian Freitas

ASX100/200/300 Index Rebalance Preview (March 2022): A Lot Happening From Now to March

There will be many changes to the ASX100/200/300 indices from now to March due to M&A activity & price moves. Plus a large funding trade following...

Brian Freitas

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Sticking With Value; Buying Materials & Industrials

Sticking with the theme from last week when we recommended Energy and Financials, two more Sectors that stand to benefit from rising rates include...

Vermilion Research

BHP Unification - Trading and Spread Update

The BHP Unification Trade is a big one. I expect that the "mandated" index sell of BHP LN and reverse funding trade are US$13bn a side, the BHP AU...

Travis Lundy

Last Week in Event SPACE: BHP Group, Crown Resorts, 51job, Hitachi, Razer Inc

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

BHP Unification - ASX Upweight in One Shot

The BHP upweight in the ASX indices will be done all at once at the close on 28 January. This will mean A$4bn of BHP to buy and a funding sell on...

Brian Freitas

ASX100/​200/300 Index Rebalance Preview (March 2022): A Lot Happening From Now to March

There will be many changes to the ASX100/200/300 indices from now to March due to M&A activity & price moves. Plus a large funding trade following...

Brian Freitas

ASX100/200/300 Index Rebalance Preview (March 2022): A Lot Happening From Now to March