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>The MSCI EM vs.EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the DXY peaked in November 2022, and also shows signs of reversing the 2-year downtrend.</li>
<li>As long as the DXY remains below $103.50-$106, we expect outperformance from EM to continue.</li>
<li>China/Hong Kong, Greece, South Africa, and Mexico stand out as attractive countries. Our top actionable Sectors include Communications, Consumer Discretionary, and Technology. We highlight 76 attractive EM stocks.</li>
</ul>


The MSCI EM vs.EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the DXY peaked in November 2022, and also shows signs of reversing the 2-year downtrend.
As long as the DXY remains below $103.50-$106, we expect outperformance from EM to continue.
China/Hong Kong, Greece, South Africa, and Mexico stand out as attractive countries. Our top actionable Sectors include Communications, Consumer Discretionary, and Technology. We highlight 76 attractive EM stocks.


EM Outperformance to Continue (Vs. EAFE) -- Add on a Pullback; DXY Needs to Hold Below $106

Founder of Antler Capital

Stanley Tsai, CFA

Thematic (Sector/Industry)

<ul>
<li>The Jan. PMI readings corroborate what investors had already known over the break. But it is noteworthy that SMEs appear much less upbeat than large corporations.  </li>
<li>SMEs account for 60% of GDP and an even higher proportion of job creation. Policy support has been keeping many of them afloat throughout the pandemic. </li>
<li>As the deadline on the PBOC's SME support program is fast approaching, small regional banks may bear the brunt of the impact on the financial system.</li>
</ul>


The Jan. PMI readings corroborate what investors had already known over the break. But it is noteworthy that SMEs appear much less upbeat than large corporations.  
SMEs account for 60% of GDP and an even higher proportion of job creation. Policy support has been keeping many of them afloat throughout the pandemic. 
As the deadline on the PBOC's SME support program is fast approaching, small regional banks may bear the brunt of the impact on the financial system.


China's Micro Loan Market: Key Takeaways from the Jan PMI

<ul>
<li>The PBOC has extended the use of its policy tools to support the green loan industry as part of the country's' drive towards carbon neutrality.</li>
<li>China's green loan market is already the largest in the world, if you agree with its definitions and can look past its limitations.</li>
<li>The state of green finance matters to investors, and not just those with explicit ESG mandates. We look at the potential pitfalls in the China.</li>
</ul>


The PBOC has extended the use of its policy tools to support the green loan industry as part of the country's' drive towards carbon neutrality.
China's green loan market is already the largest in the world, if you agree with its definitions and can look past its limitations.
The state of green finance matters to investors, and not just those with explicit ESG mandates. We look at the potential pitfalls in the China.


China's Green Loan Market: Fifty Shades of Green

<ul>
<li>We expect to see a strong start to the week for China financials names, with sentiments buoyed by upbeat consumer spending data over the new year holiday.</li>
<li>Early signs point to relatively loose conditions in the interbank market as trading resumes across the board on Monday. The central bank's easing bias will likely continue.</li>
<li>We see more momentum for the sector ahead of Q4 earnings (brokers &gt; insurers &gt; banks). Stock selection will become more important thereafter.</li>
</ul>


We expect to see a strong start to the week for China financials names, with sentiments buoyed by upbeat consumer spending data over the new year holiday.
Early signs point to relatively loose conditions in the interbank market as trading resumes across the board on Monday. The central bank's easing bias will likely continue.
We see more momentum for the sector ahead of Q4 earnings (brokers &gt; insurers &gt; banks). Stock selection will become more important thereafter.


China Financials Weekly: Jan 30 | A Bubbly Opening

Macroeconomics

<ul>
<li>Laos' public debt has likely exceeded USD20 billion, or 120% of its GDP. China's share could be as high as USD12.3 billion, making it the largest creditor nation.</li>
<li>If the debt concession Beijing offered to Sri Lanka this week is any guide, Laos could still avert a full-blown sovereign default.</li>
<li>In return, Vientiane may have to grant its northern neighbor additional tax exemptions and greater access to strategic industries. This may all be part of the BRI playbook.</li>
</ul>


Laos' public debt has likely exceeded USD20 billion, or 120% of its GDP. China's share could be as high as USD12.3 billion, making it the largest creditor nation.
If the debt concession Beijing offered to Sri Lanka this week is any guide, Laos could still avert a full-blown sovereign default.
In return, Vientiane may have to grant its northern neighbor additional tax exemptions and greater access to strategic industries. This may all be part of the BRI playbook.


China's BRI Ambition: Could Laos Be the Next One to Fall?

China

The Shanghai Stock Exchange Composite Index is a capitalization-weighted index. The index tracks the daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange. The index was developed on December 19, 1990 with a base value of 100. 

Shanghai Stock Exchange Composite Index (SHCOMP INDEX)

Shanghai Stock Exchange Composite Index (SHCOMP INDEX)

EM Outperformance to Continue (Vs. EAFE) -- Add on a Pullback; DXY Needs to Hold Below $106

EM vs. EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the $DXY peaked in November 2022. If the DXY remains below...

Vermilion Research

China's Micro Loan Market: Key Takeaways from the Jan PMI

For the most part, the Jan PMI gauges were in line with investor expectations, although the more pessimistic SME sector may be a cause for concern...

Stanley Tsai, CFA

China's Green Loan Market: Fifty Shades of Green

The PBOC is stepping up its efforts to channel financing to "green" industries. But how green is green? The answer may have implications for...

Stanley Tsai, CFA

China Financials Weekly: Jan 30 | A Bubbly Opening

We expect a strong start to the week for the China financials space, after a new year holiday that confirms investors' hopes for a speedy recovery...

Stanley Tsai, CFA

China's BRI Ambition: Could Laos Be the Next One to Fall?

Laos' spiraling debt crisis has once again put China's BRI program under public scrutiny. The outlook for the landlocked nation is looking grimmer...

Stanley Tsai, CFA