Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

We wanted to bring your attention to numerous bullish equity pattern setups in the US and Asia that are taking shape.Bull triangulation in the SPX and NDX point to a major breakout higher with targets noted. Near term risk of a pullback is a buying opportunity. Our recent update and insight called for turning long near SPX 3,21-20 support where we put on risk in the US and Asia.Compelling bullish patterns are itching for a bull breakout in Taiwan, Korea and Australia. CSI 300 flat breakout would make H shares a compelling laggard play.

We wanted to bring your attention to numerous bullish equity pattern setups in the US and Asia that are taking shape.Bull triangulation in the SPX and NDX point to a major breakout higher with targets noted. Near term risk of a pullback is a buying opportunity. Our recent update and insight called for turning long near SPX 3,21-20 support where we put on risk in the US and Asia.Compelling bullish patterns are itching for a bull breakout in Taiwan, Korea and Australia. CSI 300 flat breakout would make H shares a compelling laggard play.

Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Cross Asset Strategy

It is widely believed that a Biden win will be a boon for China, while a Trump victory will be negative for China – and consequently a boon for Taiwan. We believe this is too simplistic: while a Biden win will help China on the trade front (since Biden will likely focus less on bilateral pressure, and resume multilateral trade negotiations), China will soon face increased pressure on human rights (in Xinjiang, Tibet and Hong Kong). In the low-probability event of a clear win for Trump on 4th November (in Asia), Taiwan equities will receive a boost (and China equities will see a knee-jerk sell-off): a good way to position for this would be to go long SGX FTSE Taiwan Index Futures. A good way for investors to position themselves for a Biden win would be to be long the SGX FTSE China A50 Index Futures: we would recommend going long the latter now, in anticipation of the likely electoral outcome. However, once the dust settles, we would recommend switching to the SGX FTSE Taiwan Index Futures – as Taiwan’s underlying fundamentals are more robust than China’s. From a sectoral standpoint, a Biden win should also be more favourable to Asia’s technology sector (Alibaba, Baidu, Tencent, Samsung Electronics, TSMC) as antitrust action (already initiated against Google last week) likely spreads to Facebook and Amazon under a Biden administration.The key factor pointing to a Biden victory is the massive surge of early voting (in person and via mail-in ballots). Reuters reports that 80 million Americans (i.e., 58.5% of the total number of voters who cast their ballot in 2016) have already voted. Informal exit polling suggests that a large majority of these are Democrats or Democratic-leaning voters, while Trump voters are likelier to vote on 3rd November. This could sow chaos, as Trump may initially be reported as leading in key swing states like Pennsylvania and Michigan on Election Day, only to have this reversed after mail-in votes have been counted (something that Trump says he will challenge in the courts). Biden has led in the polls by 6-9 percentage points consistently since August; if more than half of all voters have already cast their ballot, this suggests that Biden already has a massive lead nationwide even before Election Day. Biden’s gaffe on fossil fuels in the final debate (which would normally cost him votes in Pennsylvania, Ohio and Texas) will be much less costly if half of the electorate had already cast their ballots by the time of that debate. Similarly, Trump is unlikely to be able to benefit from the 33.1% QoQ (saar) recovery announced for the US economy in 3Q 2020.The greatest danger to Taiwan in the immediate aftermath of a Biden victory lies in the possibility of China taking military action – i.e., going a step beyond the many provocative military actions China took in October 2020, to an actual attack on Taiwan. The time of confusion for the US between the defeat of an incumbent and the inauguration of the president 11 weeks later (with a possibly uncertain electoral outcome adding fuel to the fire in November) would be the ideal time for China to attack Taiwan. While that would have a disastrous immediate impact on Taiwan’s economy, in the long term it will destroy China’s relationship with the incoming Biden administration, and provoke Democrats in Congress to go even further in legislating against China’s human rights record. If there is no such military attack on Taiwan in November 2020, it will be time to switch to the SGX FTSE Taiwan Index Futures by the end of that month.

It is widely believed that a Biden win will be a boon for China, while a Trump victory will be negative for China – and consequently a boon for Taiwan. We believe this is too simplistic: while a Biden win will help China on the trade front (since Biden will likely focus less on bilateral pressure, and resume multilateral trade negotiations), China will soon face increased pressure on human rights (in Xinjiang, Tibet and Hong Kong). In the low-probability event of a clear win for Trump on 4th November (in Asia), Taiwan equities will receive a boost (and China equities will see a knee-jerk sell-off): a good way to position for this would be to go long SGX FTSE Taiwan Index Futures. A good way for investors to position themselves for a Biden win would be to be long the SGX FTSE China A50 Index Futures: we would recommend going long the latter now, in anticipation of the likely electoral outcome. However, once the dust settles, we would recommend switching to the SGX FTSE Taiwan Index Futures – as Taiwan’s underlying fundamentals are more robust than China’s. From a sectoral standpoint, a Biden win should also be more favourable to Asia’s technology sector (Alibaba, Baidu, Tencent, Samsung Electronics, TSMC) as antitrust action (already initiated against Google last week) likely spreads to Facebook and Amazon under a Biden administration.The key factor pointing to a Biden victory is the massive surge of early voting (in person and via mail-in ballots). Reuters reports that 80 million Americans (i.e., 58.5% of the total number of voters who cast their ballot in 2016) have already voted. Informal exit polling suggests that a large majority of these are Democrats or Democratic-leaning voters, while Trump voters are likelier to vote on 3rd November. This could sow chaos, as Trump may initially be reported as leading in key swing states like Pennsylvania and Michigan on Election Day, only to have this reversed after mail-in votes have been counted (something that Trump says he will challenge in the courts). Biden has led in the polls by 6-9 percentage points consistently since August; if more than half of all voters have already cast their ballot, this suggests that Biden already has a massive lead nationwide even before Election Day. Biden’s gaffe on fossil fuels in the final debate (which would normally cost him votes in Pennsylvania, Ohio and Texas) will be much less costly if half of the electorate had already cast their ballots by the time of that debate. Similarly, Trump is unlikely to be able to benefit from the 33.1% QoQ (saar) recovery announced for the US economy in 3Q 2020.The greatest danger to Taiwan in the immediate aftermath of a Biden victory lies in the possibility of China taking military action – i.e., going a step beyond the many provocative military actions China took in October 2020, to an actual attack on Taiwan. The time of confusion for the US between the defeat of an incumbent and the inauguration of the president 11 weeks later (with a possibly uncertain electoral outcome adding fuel to the fire in November) would be the ideal time for China to attack Taiwan. While that would have a disastrous immediate impact on Taiwan’s economy, in the long term it will destroy China’s relationship with the incoming Biden administration, and provoke Democrats in Congress to go even further in legislating against China’s human rights record. If there is no such military attack on Taiwan in November 2020, it will be time to switch to the SGX FTSE Taiwan Index Futures by the end of that month.  

Biden Vs Trump: How Best to Play the Impact on Taiwan and China

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.

MSCI Emerging Markets Index / Technical Analysis

The MSCI EM index (local currency) remains in an uptrend and is testing all-time highs set in January 2018 near 65,800; as long as the index is above 60,000 we are constructive from a price perspective.  China (CSI 300, MSCI China) continues to offer many attractive setups and accounts for the vast majority of today’s recommendations. Taiwan (TAIEX) continues to be worthy of an overweight within the EM universe, while South Korea (KOSPI) and India (SENSEX) display improving price and RS trends -- add exposure.

The MSCI EM index (local currency) remains in an uptrend and is testing all-time highs set in January 2018 near 65,800; as long as the index is above 60,000 we are constructive from a price perspective.  China (CSI 300, MSCI China) continues to offer many attractive setups and accounts for the vast majority of today’s recommendations. Taiwan (TAIEX) continues to be worthy of an overweight within the EM universe, while South Korea (KOSPI) and India (SENSEX) display improving price and RS trends -- add exposure.

Macroeconomics

Taiwan's industrial production has expanded in each of the last 5 months, accelerating in June 2020 to 7.3% YoY growth. This reflects the fact that, despite its deep commercial ties with the PRC, Taiwan has successfully contained the impact of Covid-19. With just 458 cases in total (of which 440 have recovered, 7 died and just 11 currently have Covid), Taiwan's economy has remained open throughout the global crisis, averting the impact of the global recession. Exports were the one sector that couldn't be immune to the global slump. They declined 3% YoY in 2Q 2020, but the trade surplus widened YoY to US$11.8 billion for the quarter. More pertinently, Taiwan's export orders rose 6.5% YoY in June, with ICT orders soaring 17.1% YoY and electronics orders 23.2% YoY. Taiwan is set to reap the benefits of the re-shoring of manufactured-export capacity back to Taiwan from China over the past couple of years, and will likely see a considerable acceleration of economic activity in 2H 2020.  Taiwan's fiscal measures to combat Covid have been focused on re-training, job-support subsidies, and incentives for investments in re-making workplaces for the post-Covid era (with provisions for social distancing and other health/safety measures). Specific economic stimulus measures included support to SMEs, loan and credit-card payment extensions, and reduction in interest rates on residential and consumer loans (by 0.5% and 0.75% respectively). These supportive measures have buoyed domestic demand at a time when the tourist-facing sectors (like in the rest of the world) are seeing a sharp contraction. Real GDP is likely to still have grown over 1.5% YoY in 1H 2020, and will likely accelerate to over 3% YoY growth in 2H 2020, and into 2021. Taiwanese companies like <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-sp-adr" target="_blank" data-smartkarma-citation="entities:8587:1" rel="noopener">Taiwan Semiconductor Sp Adr (TSM US)</a> , <a href="https://www.smartkarma.com/entities/asustek-computer-inc" target="_blank" data-smartkarma-citation="entities:13002:1" rel="noopener">Asustek Computer (2357 TT)</a> , <a href="https://www.smartkarma.com/entities/acer-inc" target="_blank" data-smartkarma-citation="entities:15726:1" rel="noopener">Acer Inc (2353 TT)</a> , <a href="https://www.smartkarma.com/entities/hon-hai-precision-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:745:1" rel="noopener">Hon Hai Precision Industry (2317 TT)</a>, <a href="https://www.smartkarma.com/entities/foxconn-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:11950:1" rel="noopener">Foxconn Technology (2354 TT)</a> are ideally positioned to benefit from the powerful rebound in export demand, as is <a href="https://www.smartkarma.com/entities/yue-yuen-industrial-hldg" target="_blank" data-smartkarma-citation="entities:12281:1" rel="noopener">Yue Yuen Industrial Hldg (551 HK)</a> with most of its manufacturing based in Vietnam (the other Asian economy relatively unscathed by Covid). We recommend investors stay solidly Overweight Taiwan.

Taiwan's industrial production has expanded in each of the last 5 months, accelerating in June 2020 to 7.3% YoY growth. This reflects the fact that, despite its deep commercial ties with the PRC, Taiwan has successfully contained the impact of Covid-19. With just 458 cases in total (of which 440 have recovered, 7 died and just 11 currently have Covid), Taiwan's economy has remained open throughout the global crisis, averting the impact of the global recession. Exports were the one sector that couldn't be immune to the global slump. They declined 3% YoY in 2Q 2020, but the trade surplus widened YoY to US$11.8 billion for the quarter. More pertinently, Taiwan's export orders rose 6.5% YoY in June, with ICT orders soaring 17.1% YoY and electronics orders 23.2% YoY. Taiwan is set to reap the benefits of the re-shoring of manufactured-export capacity back to Taiwan from China over the past couple of years, and will likely see a considerable acceleration of economic activity in 2H 2020.  Taiwan's fiscal measures to combat Covid have been focused on re-training, job-support subsidies, and incentives for investments in re-making workplaces for the post-Covid era (with provisions for social distancing and other health/safety measures). Specific economic stimulus measures included support to SMEs, loan and credit-card payment extensions, and reduction in interest rates on residential and consumer loans (by 0.5% and 0.75% respectively). These supportive measures have buoyed domestic demand at a time when the tourist-facing sectors (like in the rest of the world) are seeing a sharp contraction. Real GDP is likely to still have grown over 1.5% YoY in 1H 2020, and will likely accelerate to over 3% YoY growth in 2H 2020, and into 2021. Taiwanese companies like Taiwan Semiconductor Sp Adr (TSM US) , Asustek Computer (2357 TT) , Acer Inc (2353 TT) , Hon Hai Precision Industry (2317 TT), Foxconn Technology (2354 TT) are ideally positioned to benefit from the powerful rebound in export demand, as is Yue Yuen Industrial Hldg (551 HK) with most of its manufacturing based in Vietnam (the other Asian economy relatively unscathed by Covid). We recommend investors stay solidly Overweight Taiwan. 

Taiwan: Recession? What Recession? A Model Democracy Combats Covid

China's industrial output declined 13.5% YoY in January-February 2020, retail sales declined by 20.5% YoY, and fixed asset investment (FAI) plummeted by 24.5% YoY. While March does account for almost 40% of economic activity in Q1, there can be little doubt that China's real GDP will contract 5-7% YoY in 1Q 2020, the first YoY contraction in economic activity at least since 1990. Despite those dire numbers, China's imports declined only a modest 4% YoY -- impacted much less than expected by Covid-19. This is modestly good news for the rest of Asia, which consequently did not suffer from as severe a slump in China's demand for their exports. However, the supply disruptions (and particularly the delays in recalling workers from their CNY holidays) caused a sharp 17.2% YoY contraction in China's exports in January-February 2020, causing the trade balance to swing to a deficit of US$7.09 billion for the 2-month period.The supply disruptions in China (and the growing global concerns about the world's dependence on China's manufacturing behemoth) are leading to increased "re-shoring" of manufacturing (and export capacity) to Taiwan, Korea (slightly disguised in recent months by its own Covid-19 outbreak), ASEAN, India and Mexico. Taiwan and Vietnam's exports respectively expanded 8.6% and 8.4% YoY in Jan-Feb 2020, crowning the former's export turnaround of 2H 2019. But Vietnam is no longer the only ASEAN beneficiary of re-shoring: the Philippines exports grew 9.7% YoY in January (the second consecutive month of robust exports), Indonesia's exports were up 11% YoY in February 2020 (taking Jan-Feb 2020 growth to 4.1% YoY), and Thailand's exports grew 3.4% YoY in January 2020 (their first growth in half a year). India's goods exports were up 2.9% YoY in February 2020 (ending six months of contraction), and its services exports continued to grow strongly (+6.1% YoY in January 2020). Most strikingly, despite its Covid-19 outbreak (the second worst in East Asia) and a 16.6% YoY decline in vehicle exports, Korea's goods exports grew 4.5% YoY in February 2020. China's supply disruptions are being partly mitigated by enhanced exports from the rest of Asia. As China ramps up production this month, it will in turn help mitigate the global impact of the supply disruptions as the rest of Asia (and the world) locks down.    But, we expect some of this re-shoring from China to become a permanent feature, stimulated both by the higher US tariffs on China's exports, and by the enhanced need to diversify companies' production bases away fro China. In January 2020, for instance, US imports from China were down 20% YoY, while US imports from Mexico, Taiwan, Vietnam, Thailand, Malaysia and India all increased -- and those increases were a multi-month phenomenon. As US imports from China decline further this year (on account of the tariffs that remain part of the Phase 1 trade deal), all these other exporters (and South Korea) are likely to continue picking up the slack. Some reshoring back to the US will also occur, but more of the production is likely to shift to Mexico, Taiwan, Korea, India and ASEAN.

China's industrial output declined 13.5% YoY in January-February 2020, retail sales declined by 20.5% YoY, and fixed asset investment (FAI) plummeted by 24.5% YoY. While March does account for almost 40% of economic activity in Q1, there can be little doubt that China's real GDP will contract 5-7% YoY in 1Q 2020, the first YoY contraction in economic activity at least since 1990. Despite those dire numbers, China's imports declined only a modest 4% YoY -- impacted much less than expected by Covid-19. This is modestly good news for the rest of Asia, which consequently did not suffer from as severe a slump in China's demand for their exports. However, the supply disruptions (and particularly the delays in recalling workers from their CNY holidays) caused a sharp 17.2% YoY contraction in China's exports in January-February 2020, causing the trade balance to swing to a deficit of US$7.09 billion for the 2-month period.The supply disruptions in China (and the growing global concerns about the world's dependence on China's manufacturing behemoth) are leading to increased "re-shoring" of manufacturing (and export capacity) to Taiwan, Korea (slightly disguised in recent months by its own Covid-19 outbreak), ASEAN, India and Mexico. Taiwan and Vietnam's exports respectively expanded 8.6% and 8.4% YoY in Jan-Feb 2020, crowning the former's export turnaround of 2H 2019. But Vietnam is no longer the only ASEAN beneficiary of re-shoring: the Philippines exports grew 9.7% YoY in January (the second consecutive month of robust exports), Indonesia's exports were up 11% YoY in February 2020 (taking Jan-Feb 2020 growth to 4.1% YoY), and Thailand's exports grew 3.4% YoY in January 2020 (their first growth in half a year). India's goods exports were up 2.9% YoY in February 2020 (ending six months of contraction), and its services exports continued to grow strongly (+6.1% YoY in January 2020). Most strikingly, despite its Covid-19 outbreak (the second worst in East Asia) and a 16.6% YoY decline in vehicle exports, Korea's goods exports grew 4.5% YoY in February 2020. China's supply disruptions are being partly mitigated by enhanced exports from the rest of Asia. As China ramps up production this month, it will in turn help mitigate the global impact of the supply disruptions as the rest of Asia (and the world) locks down.    But, we expect some of this re-shoring from China to become a permanent feature, stimulated both by the higher US tariffs on China's exports, and by the enhanced need to diversify companies' production bases away fro China. In January 2020, for instance, US imports from China were down 20% YoY, while US imports from Mexico, Taiwan, Vietnam, Thailand, Malaysia and India all increased -- and those increases were a multi-month phenomenon. As US imports from China decline further this year (on account of the tariffs that remain part of the Phase 1 trade deal), all these other exporters (and South Korea) are likely to continue picking up the slack. Some reshoring back to the US will also occur, but more of the production is likely to shift to Mexico, Taiwan, Korea, India and ASEAN.      

China's Export Disruption Is Causing Re-Shoring of Exports to TW, VN, PH, ID

Taiwan

The MSCI Taiwan Index is a free-float weighted equity index. It was developed with a base value of 100 as of December 31 1987.

MSCI Taiwan Index (TAMSCI INDEX)

Breakout Equity Patterns in Asia and US

Compelling bullish patterns are itching for a bull breakout in Taiwan, Korea and Australia. CSI 300 flat breakout would make H shares a compelling...

Thomas Schroeder

Biden Vs Trump: How Best to Play the Impact on Taiwan and China

One way to look at Biden vs Trump is that a Trump win benefits Taiwan, a Biden win is better for China. We suggest ways of using low-cost SGX...

Prasenjit K. Basu

Remain Overweight EM Relative To EAFE

The MSCI EM index (local currency) remains in an uptrend and is testing all-time highs set in January 2018 near 65,800; as long as the index is...

Vermilion Research

Taiwan: Recession? What Recession? A Model Democracy Combats Covid

Taiwan's industrial production has expanded in each of the last 5 months, accelerating in June 2020 to 7.3% YoY growth. This reflects the fact...

Prasenjit K. Basu

China's Export Disruption Is Causing Re-Shoring of Exports to TW, VN, PH, ID

China's industrial output declined 13.5% YoY in January-February 2020, retail sales declined by 20.5% YoY, and fixed asset investment (FAI)...

Prasenjit K. Basu