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

Thematic (Sector/Industry)

Investor sentiment in the Industrials sector is turning positive after a multi-year decline among active Asia Ex-Japan fund managers.Average allocations in the Industrials sector fell from a peak of 11.4% in mid-2011 to a low of just 4.82% in July of last year.  Since that trough, allocations have started to increase, with today's levels of 5.46% the highest since late 2019.We highlight 7 companies that have attracted new investment in the early stages of the reallocation towards the Industrials sector.

Investor sentiment in the Industrials sector is turning positive after a multi-year decline among active Asia Ex-Japan fund managers.Average allocations in the Industrials sector fell from a peak of 11.4% in mid-2011 to a low of just 4.82% in July of last year.  Since that trough, allocations have started to increase, with today's levels of 5.46% the highest since late 2019.We highlight 7 companies that have attracted new investment in the early stages of the reallocation towards the Industrials sector.  

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

Our bullish outlook remains intact and is supported by the absence of breakdowns across major global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE) and ongoing positive market dynamics. Until this changes, we believe global equities are headed higher in the coming weeks and months.

Our bullish outlook remains intact and is supported by the absence of breakdowns across major global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE) and ongoing positive market dynamics. Until this changes, we believe global equities are headed higher in the coming weeks and months.

Global Equity Strategy: Stick With Reflation & Reopening Theme

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/182/768/original/BANNER-BoxDec20.png?1610728156" class="editor-image img-responsive" data-smartkarma-image-id="182768"></figure></section>[Review rates, volume growth (both strong, again), but note some cracks: US weak retail sales in December vs expectations, rising fuel costs, these threaten positive narrative]Wondering about spot container rates versus "achieved" rates? The three Taiwanese carriers show us why spot exposure, not spot rates, is the key determinant of monthly sales momentum. Fuel prices continue to rise and are now over 60% higher than they were in April 2020. High and rising fuel prices pose a threat to container carrier profitability in the near-term, in our view. We also offer brief notes on ZIM's planned IPO and weak US retail sales in December. We conclude by highlighting YTD share performance and current Price-to-book valuations close to 2.0 times.

[Review rates, volume growth (both strong, again), but note some cracks: US weak retail sales in December vs expectations, rising fuel costs, these threaten positive narrative]Wondering about spot container rates versus "achieved" rates? The three Taiwanese carriers show us why spot exposure, not spot rates, is the key determinant of monthly sales momentum. Fuel prices continue to rise and are now over 60% higher than they were in April 2020. High and rising fuel prices pose a threat to container carrier profitability in the near-term, in our view. We also offer brief notes on ZIM's planned IPO and weak US retail sales in December. We conclude by highlighting YTD share performance and current Price-to-book valuations close to 2.0 times.

TRACKING TRAFFIC/Containers & Air Cargo: Spot Vs 'Achieved' Rates | Fuel Prices Up | US Retail Weak

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/180/980/original/BANNER-BoxDec20.png?1609781008" class="editor-image img-responsive" data-smartkarma-image-id="180980"></figure></section>Within container shipping space, recent share price performance suggests investors believe the benefits of the cyclical upturn will mainly accrue to carriers like <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a>.To maintain a positive view on container carriers in the near- and medium-term, investors must embrace several key assumptions regarding demand, supply, and fuel prices. We lay out five of these key assumptions and the risks associated with them. We conclude that investors may not fully appreciate all the risks facing the sector in early 2021.

Within container shipping space, recent share price performance suggests investors believe the benefits of the cyclical upturn will mainly accrue to carriers like Evergreen Marine Corp (2603 TT).To maintain a positive view on container carriers in the near- and medium-term, investors must embrace several key assumptions regarding demand, supply, and fuel prices. We lay out five of these key assumptions and the risks associated with them. We conclude that investors may not fully appreciate all the risks facing the sector in early 2021. 

The Shaky Assumptions Behind Recent Strong Performance of Asian Container Carriers

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/178/836/original/BANNER-CARGO.png?1608075975" class="editor-image img-responsive" data-smartkarma-image-id="178836"></figure></section>Strong North American imports continued in November, and it appears the usual peak season may be stretching into mid-December and even January. Average freight rates in November -- spot and contract combined --  rose by about 13% YoY for a second consecutive month. But bunker (fuel) prices are also up compared to earlier in 2020. A spike in fuel prices in Q420 will likely eat into the nice gains in profitability shown by many carriers in Q220 and Q320. Shares of carriers have performed very well after bottoming in the first half of the year, but in our view valuations now look stretched. Betting on further gains after these stocks have doubled and tripled over the course of a few months is very risky, in our view.

Strong North American imports continued in November, and it appears the usual peak season may be stretching into mid-December and even January. Average freight rates in November -- spot and contract combined --  rose by about 13% YoY for a second consecutive month. But bunker (fuel) prices are also up compared to earlier in 2020. A spike in fuel prices in Q420 will likely eat into the nice gains in profitability shown by many carriers in Q220 and Q320. Shares of carriers have performed very well after bottoming in the first half of the year, but in our view valuations now look stretched. Betting on further gains after these stocks have doubled and tripled over the course of a few months is very risky, in our view. 

TRACKING TRAFFIC/Containers & Air Cargo: Volumes, Rates & Bunker All Firmer | Valuations Get Weird

Hong Kong

China Merchants Holdings International Company Limited, through its subsidiaries and associated companies, operates container and cargo terminals, port transportation, and airport cargo handling.  The Company also manufactures containers, paint, and trailers as well as operates toll road, shipping, property, and dealing securities businesses.

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China Merchants Port (144 HK)

Asia Ex-Japan: Industrials Rotation

Investor sentiment in the Industrials sector is turning positive after a multi-year decline among active Asia Ex-Japan fund managers.

Steven Holden

Global Equity Strategy: Stick With Reflation & Reopening Theme

Our bullish outlook remains intact supported by the absence of breakdowns across major global indexes. Until this changes, we believe global...

Vermilion Research

TRACKING TRAFFIC/Containers & Air Cargo: Spot Vs 'Achieved' Rates | Fuel Prices Up | US Retail Weak

Although December container volumes and average pricing improved, we see increasing risks, including rising fuel prices and lackluster US retail...

Tracking Traffic

The Shaky Assumptions Behind Recent Strong Performance of Asian Container Carriers

Container carriers have performed very well since mid-2020, and we concede we underestimated the strength of spot rates in recent weeks. But...

Tracking Traffic

TRACKING TRAFFIC/Containers & Air Cargo: Volumes, Rates & Bunker All Firmer | Valuations Get Weird

Volumes and average freight rates firmed again in November, but so did fuel prices. Many shares of container carriers also jumped (again) this...

Tracking Traffic

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