China and US Equity Analyst

Roger Xie

Cross Asset Strategy

We believe China A-shares are still in early inning of double-digit return in 2020, though facing the uncertainties in widespread coronavirus and economic slowdown. The pro-growth policies and reasonable valuation could propel China A-share higher because a prosperous stock market and wealthy community are one of President Xi's tall orders. Thus, we recommend to overweight tech and consumer sector in China A-share. (Individual A-share stocks recommendations will be published in follow-on reports later)

We believe China A-shares are still in early inning of double-digit return in 2020, though facing the uncertainties in widespread coronavirus and economic slowdown. The pro-growth policies and reasonable valuation could propel China A-share higher because a prosperous stock market and wealthy community are one of President Xi's tall orders. Thus, we recommend to overweight tech and consumer sector in China A-share. (Individual A-share stocks recommendations will be published in follow-on reports later)

China A-Share Strategy: Pro-Growth Policies to Boost Tech-Focused Equity Market (SZCOMP Index)

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

Shenzhen Stock Exchange Composite Index / Technical Analysis

China (MSCI China, Shenzhen A Share) offers a plethora of attractive setups and is a major focus in today’s report. Taiwan (TAIEX) is another focus as it is one of the few global indexes that is not yet breaking down. Lastly, Turkey (ISE National 100) appears to offer an attractive pullback opportunity. Within EM, we highlight attractive opportunities across the technology, consumer discretionary, health care and communications sectors.

China (MSCI China, Shenzhen A Share) offers a plethora of attractive setups and is a major focus in today’s report. Taiwan (TAIEX) is another focus as it is one of the few global indexes that is not yet breaking down. Lastly, Turkey (ISE National 100) appears to offer an attractive pullback opportunity. Within EM, we highlight attractive opportunities across the technology, consumer discretionary, health care and communications sectors.

We continue to see coronavirus concerns as helping correct the excess bullish sentiment across global equity markets in the short-term. Additionally, considering the dearth of breakdowns, we continue to believe this is a bull market until proven otherwise and a “buy the dip” strategy remains warranted. We recap importat technical levels across markets and highlight opportunities within the Services, Technology, Financial Services, and Staples Sectors.

We continue to see coronavirus concerns as helping correct the excess bullish sentiment across global equity markets in the short-term. Additionally, considering the dearth of breakdowns, we continue to believe this is a bull market until proven otherwise and a “buy the dip” strategy remains warranted. We recap importat technical levels across markets and highlight opportunities within the Services, Technology, Financial Services, and Staples Sectors.

Global Equity Strategy: Growth Over Value

Global equities (MSCI ACWI) are decisively breaking above 1-month resistance on US-China trade war optimism, incrementally improving the technical picture. While there is some room to move higher in the near-term, we are hesitant to get too excited because several major indexes have additional hurdles to jump. We highlight important technical levels across major averages including Europe/UK (STOXX 600), Hong Kong (Hang Seng), Japan (TOPIX), and several EM countries (China, Brazil, Russia, Taiwan, and India).  Finally, we highlight attractive opportunities within the Consumer Discretionary, Heath Care and Services sectors.

Global equities (MSCI ACWI) are decisively breaking above 1-month resistance on US-China trade war optimism, incrementally improving the technical picture. While there is some room to move higher in the near-term, we are hesitant to get too excited because several major indexes have additional hurdles to jump. We highlight important technical levels across major averages including Europe/UK (STOXX 600), Hong Kong (Hang Seng), Japan (TOPIX), and several EM countries (China, Brazil, Russia, Taiwan, and India).  Finally, we highlight attractive opportunities within the Consumer Discretionary, Heath Care and Services sectors.

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Equity Bottom-Up

The Chinese authorities have finally approved the longawaited Shenzhen-Hong Kong Stock Connect. A joint statement by the two regulators in China and Hong Kong stated the timeline in preparing for the second stock connect program would be around four months.This includes the finalisation of trading systems and clearing rules for the exchanges, regulatory approvals, the completion of trading operations and systems for market participants and investor education.We adjust our forecasts to incorporate one month of the Shenzhen Connect but note possible delays as the Shanghai Connect program was pushed back prior to its launch.Analyst: Michael Wu

The Chinese authorities have finally approved the longawaited Shenzhen-Hong Kong Stock Connect. A joint statement by the two regulators in China and Hong Kong stated the timeline in preparing for the second stock connect program would be around four months.This includes the finalisation of trading systems and clearing rules for the exchanges, regulatory approvals, the completion of trading operations and systems for market participants and investor education.We adjust our forecasts to incorporate one month of the Shenzhen Connect but note possible delays as the Shanghai Connect program was pushed back prior to its launch.Analyst: Michael Wu

Long-Awaited Shenzhen-Hong Kong Stock Connect Approved; Upside Factored In

China

Shenzhen Composite Index is an actual market-cap weighted index (no free float factor) that tracks the stock performance of all the A-share and B-share lists on Shenzhen Stock Exchange. The index was developed on April 3, 1991 with a base price of 100. 

Shenzhen Stock Exchange Composite Index (SZCOMP INDEX)

Shenzhen Stock Exchange Composite Index (SZCOMP INDEX)

EM Outperforming; Favor EM over EAFE

China (MSCI China, Shenzhen A Share) offers a plethora of attractive setups and is a major focus in today’s report. Taiwan (TAIEX) is another focus...

Vermilion Research

Global Equity Strategy: Growth Over Value

We continue to see coronavirus concerns as helping correct the excess bullish sentiment across global equity markets in the short-term....

Vermilion Research

Global Equity Strategy: Guarded Optimism

Global equities (MSCI ACWI) are decisively breaking above 1-month resistance on US-China trade war optimism, incrementally improving the technical...

Vermilion Research

Long-Awaited Shenzhen-Hong Kong Stock Connect Approved; Upside Factored In

The Chinese authorities have finally approved the longawaited Shenzhen-Hong Kong Stock Connect. A joint statement by the two regulators in China...

Morningstar, Inc.

China A-Share Strategy: Pro-Growth Policies to Boost Tech-Focused Equity Market (SZCOMP Index)

We believe China A-shares are still in early inning of double-digit return in 2020, though facing the uncertainties in widespread coronavirus and...

Roger Xie

EM Outperforming; Favor EM over EAFE

China (MSCI China, Shenzhen A Share) offers a plethora of attractive setups and is a major focus in today’s report. Taiwan (TAIEX) is another focus...

Vermilion Research

Global Equity Strategy: Growth Over Value

We continue to see coronavirus concerns as helping correct the excess bullish sentiment across global equity markets in the short-term....

Vermilion Research

Global Equity Strategy: Guarded Optimism

Global equities (MSCI ACWI) are decisively breaking above 1-month resistance on US-China trade war optimism, incrementally improving the technical...

Vermilion Research

Long-Awaited Shenzhen-Hong Kong Stock Connect Approved; Upside Factored In

The Chinese authorities have finally approved the longawaited Shenzhen-Hong Kong Stock Connect. A joint statement by the two regulators in China...

Morningstar, Inc.