Author: Derek Higa

Derek Higa is a senior equity analyst and a lead for the APAC region and the Consumer Cyclical sector. He serves on the Global Focus List Committee, which approves all equity recommendations for developed, emerging, and frontier markets, and compiles Asia Watch, a weekly recap of regional investing news. Since joining William O’Neil + Company in 2005, he has lent his market expertise to alpha capture, product development, and historical studies on outperforming stocks. Derek graduated summa cum laude from California State University Los Angeles with a B.S. in Finance and Information Systems. He holds a Series 65 securities license.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia Ex Japan index (AAXJ) continues to make gains, rising to year-to-date highs. Major markets are trading constructively above logical support levels despite elevated distribution days. Focus on stocks that are trading above logical support and are close to pivot with rising relative strength.
  • Seven markets, including Japan and Hong Kong, are in a Confirmed Uptrend. Two markets, including India, are in an Uptrend Under Pressure. Four markets, including China and Australia, are in a Rally Attempt.
  • We have prepared a presentation on current topics, themes and market trends. This includes improving breath in the APAC region, a China 2018 tariff history, South Korea post-election clarity, Japan’s narrowing value versus growth spread, India’s institutional support, and the Taiwan Tech recovery off lows. For more detail and ideas, see our APAC Overview Presentation, attached and here.
  • Highlighted Focus List Idea: Xiaomi (XIAI.HK; 1810 HK), King Slide Works (KSW.TW; 2059 TT), Hindustan Aeronautics (IAD.IN; HNAL IN), KB Financial (KHB.KR; 105560 KS), Hansoh Pharma (HANP.HK; 3692 HK), and Konami (KONA.JP; 9766 JP). Refer to page 5-10 for annotated charts.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia Ex Japan index (AAXJ) found support along its rising 21-DMA and is consolidating near its year-to-date high. Markets must hold above their key support levels to remain constructive in the near term. Presidents Trump and Xi are expected to speak on tariffs this week.
  • Seven markets, including Japan and Hong Kong, are in a Confirmed Uptrend. Two markets, including India, are in an Uptrend Under Pressure. Three markets, including China and Australia, are in a Rally Attempt. Thailand is in a Downtrend. We shifted India to an Uptrend Under Pressure from a Confirmed Uptrend, after it breached its 21-DMA for the first time since April.
  • South Korea is the only major market trading close to its year-to-date high. Lee Jae-myung won South Korea’s presidency, ending political turmoil and pledging economic revival, deregulation and support for low-income groups. His government will also seek more time for U.S. trade talks.
  • The Japanese Yen has been appreciating against the U.S. Dollar since May, and is approaching its key support level. The spread between the Value and Growth indices in Japan has narrowed compared to before the announcement of reciprocal tariffs. Breadth continues to improve in Japan, with large caps marginally leading in terms of median RS Rating. Retail, Capital Equipment and Technology are among the leading sectors.
  • Highlighted Focus List Idea: Rakuten Bank (RAKB.JP; 5838 JP). Refer to page 8 for an annotated chart.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia Ex Japan index (AAXJ) is consolidating near its year-to-date high. Major markets have pulled back from recent highs and are approaching logical support levels. Focus on stocks that are trading above logical support and close to pivot with rising relative strength.
  • Eight markets, including Japan, South Korea, India and Hong Kong, are in a Confirmed Uptrend. Three markets, including China, are in a Rally Attempt. Malaysia and Thailand are in an Uptrend Under Pressure. South Korea was upgraded to a Confirmed Uptrend from a Rally Attempt.
  • South Korea’s KOSPI broke out to a new year-to-date high and is among the leading APAC markets year-to-date, with a price return of 11.3%. The market is looking past the political uncertainty that started in December. It may be resolved with the election of a new President next week. The central bank’s dovish sentiment and interest rate cut are also positive for the market.
  • In South Korea, breadth continues to improve and is at the highest level in the last 26 weeks. Improvement in breadth was across all market cap categories. By sector, Capital Equipment, Financial and Consumer Staple are leading, while Technology is lagging. Refer to page 11 for a list of leaders in South Korea across all market cap with rising relative strength (RS greater than 70 and 3-month RS greater than 70). The stocks near pivot are highlighted in bold.
  • Highlighted Focus List Idea: HD Hyundai Heavy Industries (HH3.KR; 329180 KS). Refer to page 8 for an annotated chart.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia Ex Japan index (AAXJ) is consolidating after making a year-to-date high. The majority of markets are trading constructively. Focus on stocks that are breaking out, building the right side of bases or trading close to pivot, with rising relative strength. Avoid extended ideas.
  • Nine markets, including Japan, India and Hong Kong, are in a Confirmed Uptrend. Four markets, including China and South Korea, are in a Rally Attempt. The average distribution day count is close to 2.
  • Technology, which was weakening in the APAC Sector Rotation Chart, started to improve in the last three weeks and is moving towards the top-right quadrant (Outperforming over 26 weeks and improving over 4 weeks). The Technology sector’s improvement in recent weeks coincided with improvement in AI-related stocks in the U.S. Nvidia’s results next week will be the near-term catalyst for Technology stocks.
  • However, the Technology sector’s performance within APAC markets is mixed. Technology stocks in Japan, Hong Kong and Australia are leading, led by Software-related Industry Groups. In other major APAC markets, Technology is bouncing off lows with only select ideas looking constructive. Broadly, Semiconductor- and Hardware-related stocks still face overhead resistance.
  • Refer to page 10 for a list of constructive AI- and data center-related beneficiaries across APAC markets. Refer to page 11 for a list of constructive Technology ideas across APAC with rising relative strength (RS Rating greater than 70).
  • Highlighted Focus List Idea: Xiaomi (XIAI.HK; 1810 HK). Refer to page 9 for an annotated chart.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia Ex Japan index (AAXJ) broke above the December 2024 high of $77.5 and made a five-month high. The U.S.-China trade de-escalation has shifted the narrative positively and market sentiment has improved. Focus on stocks trading close to pivot with rising relative strength.
  • Nine markets, including Japan, India and Hong Kong, are in a Confirmed Uptrend. Four markets, including China and South Korea, are in a Rally Attempt. Hong Kong was upgraded to a Confirmed Uptrend from a Rally Attempt after the index staged a Day-20 follow-through day.
  • The reduction in U.S.–China tariffs and better-than-expected trade negotiation outcomes lifted global markets, with key APAC indices such as Japan, India and Taiwan clearing resistance levels. A sustained rally depends on further progress in trade talks, and supportive central bank actions.
  • Compared to 2018, the current environment benefits from a rate-cutting cycle and faster resolution of trade tensions. Markets have bottomed before the 90-day truce, unlike in 2018 when they bottomed after. Look for continued positive catalysts and the Hang Seng to form higher lows and higher highs.
  • We are noticing broadening of strength in Hong Kong. The number of near-pivot stocks is on a gradual rise. Most sectors, except Health Care, are gaining momentum, with an increase in stocks trading above their 50-DMA. Refer to page 12 for a list of constructive leaders in Hong Kong.
  • Highlighted Focus List Idea: Shanghai Chicmax Cosmetic (SHCC.HK; 2145 HK). Refer to page 7 for an annotated chart

APAC Weekly Summary + IG RS Point to Broad Theme + Marico

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia Ex Japan index (AAXJ) gapped up and reclaimed its 50- and 200-DMAs for the first time since March. We recommend a gradual approach to increasing risk. Focus on stocks that are building the right side of bases or are trading close to pivot, with rising relative strength.
  • Seven markets, including Japan, India and Taiwan, are in a Confirmed Uptrend. Six markets, including China, Hong Kong and South Korea, are in a Rally Attempt. There were no market condition changes over the last week.
  • The Taiwan dollar appreciated strongly versus the U.S. dollar this week. The Malaysian ringgit also saw a similar move, although on a smaller scale. Strengthening domestic currencies could be reflect ongoing U.S. trade negotiations. and will put pressure on export-reliant companies if it continues.
  • Across key APAC markets, domestic-oriented or country-focused themes are leading given the uncertainty around trade policies. Defense-related industry groups are leading in India and South Korea. Refer to page 8 for constructive themes across APAC, and page 9 for leaders within these themes. Near-pivot stocks are highlighted within the list.
  • Highlighted Focus List Idea: Marico (MRC.IN; MRCO IN). Refer to page 7 for an annotated chart.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia Ex Japan index (AAXJ) is close to testing resistance along the confluence of its 50- and 200-DMAs. We recommend a gradual approach to increasing risk. Indices must now rise above resistance levels to raise conviction in a sustainable rally.
  • Seven markets, including Japan, India and Taiwan, are in a Confirmed Uptrend. Six markets, including China, Hong Kong and South Korea, are in a Rally Attempt.
  • India has the highest percentage of stocks above their 50-DMA among APAC markets. It also has a higher breakout count as a percentage of total liquid stocks. In April, we have added more India ideas to the Focus List compared with other APAC markets, signaling continued strength.
  • Technology stocks remain weak across most APAC markets, with low breadth, except in Japan. Domestically-focused and defensive sectors, such as Health Care, Consumer Staple, Retail and Financial, are outperforming amid ongoing tariff uncertainty.
  • Refer to page 8 for a list of leaders that are trading near pivot across APAC (outside of the Focus List).
  • Highlighted Focus List Idea: Solar Industries (SXO.IN; SOIL IN). Refer to page 7 for an annotated chart.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia Ex Japan index (AAXJ) bounced off its recent low and retook its 21-DMA. We recommend a gradual approach to increasing risk in markets that have staged a follow-through day. We prefer indices to rise above resistance levels to raise our conviction in a sustainable rally.
  • India, Japan and Taiwan had a follow-through day. Five markets are in a Confirmed Uptrend. Eight markets, including China and Hong Kong, are in a Rally Attempt.
  • India is the only major market trading above all key moving averages, after staging a day-6 follow-through day. Personal tax cuts, the Reserve Bank of India’s dovish stance, low inflation and eased liquidity norms are boosting domestic consumption and credit growth. A potential U.S.-India trade agreement and a falling U.S. Dollar Index could further attract foreign flows to India.
  • In India, market breadth has improved sharply since March, with Large Caps leading. Financial and Consumer Staple are outperforming based on median RS Rating. Refer to page 14 for a list of leaders in India (outside the Focus List).
  • Refer to pages 9 and 10 for a list of constructive ideas (outside the focus list) with high relative strength in Japan and Taiwan, respectively.
  • Highlighted Focus List Idea: Kaynes Technology India (KT1.IN; KAYNES IN). Refer to page 8 for an annotated chart

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia Ex Japan index (AAXJ) bounced off its recent low and is trading below all key moving averages. We recommend a defensive approach given the uncertainty around tariffs. Stay patient and wait for markets to stage a follow-through day before increasing risk. If you must stay invested, focus on defensive stocks with lower betas and rising relative strength.
  • Singapore and Indonesia are in a Confirmed Uptrend. Eleven markets, including Japan, China and Hong Kong, are in a Rally Attempt.
  • Several markets, including Hong Kong, India and Taiwan, along with the U.S. and Europe, have avoided follow-through days due to lower day/day volume. The lack of institutional support lowers the probability of an oversold rally persisting in our view. We are waiting for markets to stage a proper follow-through days before raising conviction.
  • The number of stocks near pivot in India, Hong Kong and Japan is close to a three-year low in each market. Despite a lower number of near-pivot ideas, the number of failed bases in India is close to a three-year low, implying leaders are constructive. Large caps are leading in India and Hong Kong but lagging in Japan.
  • We continue to notice rotation into defensive, domestic-oriented sectors such as Consumer Staple and Utility. Refer to pages 11-13 for stocks of interest in Hong Kong, Japan and India. These stocks have RS Ratings above 70 and are constructive compared to the market.
  • Highlighted Focus List Idea: Radico Khaitan (RKT.IN; RDCK:IN).

APAC Weekly Summary + Downtrend to Narrative Change + Giant Biogene

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia Ex Japan index (AAXJ) gapped down and is at a 52-week low after undercutting its April 2024 low. We recommend a defensive approach given the uncertainly around tariffs. If possible, raise cash and wait for volatility to settle. If you must stay invested, focus on defensive stocks with lower betas and rising relative strength.
  • All APAC markets are in a Downtrend. Singapore, Hong Kong and China were downgraded to a Downtrend from an Uptrend Under Pressure.
  • The U.S. imposed a 10% minimum tariff on all countries except Canada and Mexico, and reciprocal tariffs based on trade surpluses with the U.S. The tariffs levied on APAC countries were higher than the rest of world, which is negative for the APAC markets. The U.S. and China are engaged in an escalating trade war, with reciprocal tariffs on reciprocal tariffs. The selloff in global equities following the imposition of reciprocal tariffs has led to reduction in Focus List Ideas across all geographies.
  • In 2018, when markets sold off due to tariffs imposed by the first Trump administration, they bottomed when Central Banks intervened to support economies, and when a limited trade agreement was reached between the U.S. and China. If history is to repeat, we need to see a follow-though day, along with any of these positive catalysts. Follow-through days without the support of positive sentiment have a high chance of failure.
  • Across APAC markets, we are seeing rotation into defensive, domestic-oriented sectors such as Consumer Staple and Utility. Refer to pages 17-19 for stocks of interest in Hong Kong, Japan and India that are outside the Focus List. These stocks have an RS Rating above 70 and held up relatively compared to the market