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

Major global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE) continue to hold above critical support levels and market dynamics remain largely positive. Until this changes, we believe global equities are headed higher in the coming weeks and months. Additionally, we are reiterating our overweight recommendations on small-caps and value as we believe outperformance from these areas is likely to continue.

Major global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE) continue to hold above critical support levels and market dynamics remain largely positive. Until this changes, we believe global equities are headed higher in the coming weeks and months. Additionally, we are reiterating our overweight recommendations on small-caps and value as we believe outperformance from these areas is likely to continue.

Global Equity Strategy: Small-Caps and Value Stocks Remain in Focus

Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

Equity Bottom-Up

Mizuho Financial Group / Equity Bottom-Up

“It’s déjà vu all over again” -  Attributed to Yogi Berra (1925-2015), legendary baseball Hall of FamerGetting money from a banker is sometimes likened to trying to squeeze blood out of a stone. Customers of Mizuho Bank, the principal commercial banking subsidiary of megabank holding company <a href="https://www.smartkarma.com/entities/mizuho-financial-group-inc" target="_blank" data-smartkarma-citation="entities:219:1" rel="noopener">Mizuho Financial Group (8411 JP)</a> (MHFG), could be forgiven for agreeing with this derogatory epithet after over half of the bank’s 5,395 ATMs stopped working suddenly on Sunday 28 February.  Many customers were unable to draw cash out from the ATMs and some had their cash cards and savings passbooks ‘swallowed’ by the recalcitrant machines.  Internet banking was also apparently affected.This is not the first time that Mizuho has had major problems as a result of computer system crashes: there were similar issues in April 2002 and again in March 2011.  On both occasions, the Financial Services Agency (FSA) subsequently issued Business Correction Orders against the bank.  This time it appears that problems arose during a fixed deposit data update, causing the system to crash.Reputational damage is extremely difficult for any company to recover from easily, and perhaps more so for a bank where not only are issues of trust and public responsibility as a financial institution involved but also large sums of money.  What takes a generation to build can be lost in a moment when it comes to reputation and trust.  Smartkarma readers may well remember the public excoriation in 2010 on TV of a clutch of bank presidents both in the USA and the UK in the wake of the Global Financial Crisis. In Japan, where the megabanks emerged largely unscathed from the worst excesses of the GFC (although their investment portfolios took a severe hit in FY3/2009), incoming Mizuho Financial Group president &amp; CEO Yasuhiro Sato seemed to spend much of his first six months in office from June 2011 appearing on TV to repeatedly publicly apologize for Mizuho’s past systems errors and for the ongoing inconvenience to customers.Senior management clearly have much to do in the wake of this latest incident to restore Mizuho’s reputation among customers as a brand that is synonymous with reliability.Market reaction has been typically perverse, with Mizuho’s share price rising gently as part of the recovery from Friday’s Wall Street sell-off.  The stock is up close to +13% over the last 3 months (against an average +17% for peers) but is only +1.5% YoY (versus an average +2.5% for peers).  In short, the stock is underperforming even as the banking sector outperforms the Topix Index for the first time in several years.As we have said in past Smartkarma Insights, MHFG’s lack of consistency, either in profit generation or management execution, makes this a difficult stock to recommend on fundamentals.  This latest systems débâcle will not improve its already battered reputation for reliability.  MHFG has time and again promised much but then either failed to deliver or has surprised the market with sudden sweeping changes in strategy, requiring long time-horizons for implementation and creating value.Caveat Emptor! (May the Buyer Beware!) remains our advice to would-be investors in this enormous but highly volatile banking group.

“It’s déjà vu all over again” -  Attributed to Yogi Berra (1925-2015),  legendary baseball Hall of FamerGetting money from a banker is sometimes likened to trying to squeeze blood out of a stone. Customers of Mizuho Bank, the principal commercial banking subsidiary of megabank holding company Mizuho Financial Group (8411 JP) (MHFG), could be forgiven for agreeing with this derogatory epithet after over half of the bank’s 5,395 ATMs stopped working suddenly on Sunday 28 February.  Many customers were unable to draw cash out from the ATMs and some had their cash cards and savings passbooks ‘swallowed’ by the recalcitrant machines.  Internet banking was also apparently affected.This is not the first time that Mizuho has had major problems as a result of computer system crashes: there were similar issues in April 2002 and again in March 2011.  On both occasions, the Financial Services Agency (FSA) subsequently issued Business Correction Orders against the bank.  This time it appears that problems arose during a fixed deposit data update, causing the system to crash.Reputational damage is extremely difficult for any company to recover from easily, and perhaps more so for a bank where not only are issues of trust and public responsibility as a financial institution involved but also large sums of money.  What takes a generation to build can be lost in a moment when it comes to reputation and trust.  Smartkarma readers may well remember the public excoriation in 2010 on TV of a clutch of bank presidents both in the USA and the UK in the wake of the Global Financial Crisis. In Japan, where the megabanks emerged largely unscathed from the worst excesses of the GFC (although their investment portfolios took a severe hit in FY3/2009), incoming Mizuho Financial Group president &amp; CEO Yasuhiro Sato seemed to spend much of his first six months in office from June 2011 appearing on TV to repeatedly publicly apologize for Mizuho’s past systems errors and for the ongoing inconvenience to customers.Senior management clearly have much to do in the wake of this latest incident to restore Mizuho’s reputation among customers as a brand that is synonymous with reliability.Market reaction has been typically perverse, with Mizuho’s share price rising gently as part of the recovery from Friday’s Wall Street sell-off.  The stock is up close to +13% over the last 3 months (against an average +17% for peers) but is only +1.5% YoY (versus an average +2.5% for peers).  In short, the stock is underperforming even as the banking sector outperforms the Topix Index for the first time in several years.As we have said in past Smartkarma Insights, MHFG’s lack of consistency, either in profit generation or management execution, makes this a difficult stock to recommend on fundamentals.  This latest systems débâcle will not improve its already battered reputation for reliability.  MHFG has time and again promised much but then either failed to deliver or has surprised the market with sudden sweeping changes in strategy, requiring long time-horizons for implementation and creating value.Caveat Emptor! (May the Buyer Beware!) remains our advice to would-be investors in this enormous but highly volatile banking group.

Mizuho Financial Group (8411 JP):  Deja Vu All Over Again

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

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Nissin Foods Holdings / Equity Capital Markets

Three shareholders of Nissin Foods plan to raise around US$226m via a global offering by selling 2.9% of the company. The selldown is being undertaken to reduce the cross shareholding.In this insight, we will run the deal through our ECM framework and provide our thoughts on the deal.

Three shareholders of Nissin Foods plan to raise around US$226m via a global offering by selling 2.9% of the company. The selldown is being undertaken to reduce the cross shareholding.In this insight, we will run the deal through our ECM framework and provide our thoughts on the deal.

Nissin Foods Placements - Shouldn't Have a Large Impact

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

In this Insight, we look at Asian financial pairs that normally trade in a tight band versus each other and are now trading at levels that are close to an extreme, making it likely that there could be a short term reversal.These are all large cap financials that trade in excess of US$20m a day, so implementing the strategy should be possible using stock borrow or single stock futures.These ideas are based purely off the stock price history and we recommend investors use a fundamental overlay to determine if the price action is reflective of changes in the sector that benefit one company at the expense of the other, or benefit one company more than the other.

In this Insight, we look at Asian financial pairs that normally trade in a tight band versus each other and are now trading at levels that are close to an extreme, making it likely that there could be a short term reversal.These are all large cap financials that trade in excess of US$20m a day, so implementing the strategy should be possible using stock borrow or single stock futures.These ideas are based purely off the stock price history and we recommend investors use a fundamental overlay to determine if the price action is reflective of changes in the sector that benefit one company at the expense of the other, or benefit one company more than the other.

Japan

Sumitomo Mitsui Financial Group, Inc. is a holding company established by Sumitomo Mitsui Banking Corporation.  Sumitomo Mitsui Card Co., SMBC Leasing Co., and The Japanese Research Institute, Ltd. joined the Group in Feb., 2003. The Company manages financial operations for its subsidiaries.  The Group provides commercial banking and a variety of financial services.

Sumitomo Mitsui Financial Group (Sponsored Adr) (SMFG US)

Sumitomo Mitsui Financial Group (Sponsored Adr)

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Sumitomo Mitsui Financial Group (Sponsored Adr) (SMFG US)

Global Equity Strategy: Small-Caps and Value Stocks Remain in Focus

We are reiterating our overweight recommendations on small-caps and value as we believe outperformance from these areas is likely to continue.

Vermilion Research

Mizuho Financial Group (8411 JP): Deja Vu All Over Again

Getting money from a banker is sometimes likened to trying to squeeze blood out of a stone. Customers of Mizuho Bank experienced this first-hand...

J. Brian Waterhouse

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

Nissin Foods Placements - Shouldn't Have a Large Impact

Three shareholders of Nissin Foods plan to raise around US$226m via a global offering by selling 2.9% of the company. The selldown is being...

Sumeet Singh

Pairs Trading Ideas - Asian Financials

We look at liquid and large cap pairs from the financials sector that exhibit mean-reversion and are currently trading at or near an extreme based...

Brian Freitas

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