Macro-Industry Strategy: Global Views Update

We have not made any changes to our Macro-Industry Strategy Table in the past week and maintain our Bullish North American Palladium view, which we are playing via Stillwater Mining and is up by 1.5% since late March . This week we also explore ways to play the recovery in the US solar market and revisit a Vietnamese infrastructure view that we flagged up back in February.

Our Bullish North American Palladium view, proxied via Stillwater Mining continues to play out and is up 1.5% since we initiated it on March 19, outperforming the S&P 500 which is up by 0.4% over the same period. We believe that palladium producers in North America will benefit from a combination of strong demand - particularly from the autos sector - and ongoing supply-side concerns emanating from both South Africa and Russia, which are the two largest palladium producing countries.

Upside Potential For US Solar

Still Hanging In There
US - Stillwater Mining Equity, US$

Macro-Industry Strategy: Global Views Update

We have not made any changes to our Macro-Industry Strategy Table in the past week and maintain our Bullish North American Palladium view, which we are playing via Stillwater Mining and is up by 1.5% since late March . This week we also explore ways to play the recovery in the US solar market and revisit a Vietnamese infrastructure view that we flagged up back in February.

Global Macro-Industry Strategy
Performance as of 22 April 2014
View Date Initiated % Gain/Loss Benchmark %
Bullish North American Palladium Stillwater Mining Open 19-Mar-14 1.5 0.4
Source: BMI. Data accurate as of April 22. (-) reflects a loss on our view. Benchmarking is against a long position in the country's benchmark equity index

Our Bullish North American Palladium view, proxied via Stillwater Mining continues to play out and is up 1.5% since we initiated it on March 19, outperforming the S&P 500 which is up by 0.4% over the same period. We believe that palladium producers in North America will benefit from a combination of strong demand - particularly from the autos sector - and ongoing supply-side concerns emanating from both South Africa and Russia, which are the two largest palladium producing countries.

Still Hanging In There
US - Stillwater Mining Equity, US$

Upside Potential For US Solar

Our renewable energy team believes that the US solar sector is on the cusp of a revival in both fundamental and share price terms, and highlight companies such as First Solar, Solar City, SunEdison and SunPower as major manufacturers to watch. This assessment is based on four dynamics: lower priced solar modules, making them more affordable to purchase and install; the rise of distributed generation solar solutions for both residential and industrial use; off-grid solutions being championed in emerging markets with low electrification rates; and small-scale solar-based projects filling the gap left by large-scale utility projects, which remain at the whim of government policy (see: 'Revival In US Solar Ahead: Technicals Lagging Fundamentals For Now', April 22). Valuations are mixed for the different companies ranging from relatively modest P/E multiples (12.0x) to extremely richly valued on a P/B basis (21.0x) for example. The longer-term technical outlook for solar stocks is increasingly bullish, with more sustained uptrends emerging. A case is point is SunEdison, which recently bounced off support, and has broken through resistance at USD17.80 to trade at USD20.00.

Harnessing The Power of The Sun
US - SunEdison Equity, US$
Viet Nam Construction and Import-Export JSC
Entry Point Could Be Close
Vietnam - Viet Nam Construction and Import-Export Equity, VND
MACRO-INDUSTRY STRATEGY TABLE
Bullish North American Palladium Miners, played via Stillwater See 19 Mar 14, Turning Bullish North American Palladium
- Supply risks due to ongoing labour disputes in South Africa and the potential sanctions on Russia
- Strong automotive production growth in both the US and Mexico over the coming quarters
- Technicals show that Stillwater has broken through resistance around USD15.00
BMI
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