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) bounced off its support level along March lows of $63.40 and is currently close to resistance along the converging 50- and 200-DMAs. We recommend a cautious approach. Gradually allocate capital to ideas breaking out of sound bases, or trading constructively above key moving averages with rising relative strength.
  • Japan and Hong Kong are in a Confirmed Uptrend. Three markets, including India and Australia, are in an Uptrend Under Pressure. Seven markets, including China, Taiwan and South Korea, are in a Rally Attempt. The Philippines is in a Downtrend.
  • The MSCI Japan Value index continues to outperform the growth index in the near term, while breadth has improved over the past week. Look for an increase in the number of breakouts to raise conviction in a sustainable rally.
  • Stocks with higher revenue exposure outside Japan have outperformed and have a higher median RS Rating compared to all liquid stocks in Japan. Refer to pages 10 and 11 for mini charts of notable large caps with high revenue exposure outside Japan.
  • The Energy and Utility sectors lead in Japan based on median RS Rating. Retail, Financial and Consumer Staple have improved noticeably over the past four weeks. Refer to page 12 for a list of stocks near pivot.
  • Highlighted Focus List Idea: Chiba Bank (CHBK.JP; 8331 JP).

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) has declined below its 200-DMA and is testing key support level along March lows of $63.4. We recommend a cautious approach. Continue to be patient and wait for follow-through days before increasing risk. Focus on stocks with rising relative strength within improving industry groups.
  • Three markets, including India and Australia, are in an Uptrend Under Pressure. Five markets, including Japan, Taiwan and South Korea are in a Rally Attempt. Five, including Hong Kong and China, are in a Downtrend.
  • In the APAC sector rotation chart on page 8, Energy is in the top-right quadrant, indicating outperformance and improvement over four and 26 weeks. Upside momentum in Utility, Financial and Retail is also notable. Past outperformers, such as Technology, Capital Equipment and Consumer Cyclical, are losing momentum in the short term.
  • There are pockets of strength across major markets, as displayed by improving momentum in selected industry groups. Refer to page 9 for a table of the top four Industry Groups by market, with the most improvement in median RS over four- and eight-weeks. We have also highlighted notable themes across major markets on pages 3 and 4. Refer to page 12 for a list of near pivot stocks from improving Industry Groups.
  • Highlighted Focus List Idea: Indian Hotels (INH.IN; IH IN). Refer to page 7 for an annotated chart.

APAC Market Update

Posted on by Derek Higa

Attached is a note on APAC from Derek Higa, Research Analyst, Director of Global Equity Research, William O’Neil + Co.; Pavan HK Kumar, Equity Research Analyst, William O’Neil India; and Roshan Balaji Mishal, Equity Research Analyst, William O’Neil India.

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) has breached its 200-DMA. Next support is near $64. Major indices are under heavy selling pressure and are testing support levels. Reduce risk in ideas breaking below logical price support on above average volume. Selectively focus on ideas with rising relative strength and constructive price action.
  • India is in a Confirmed Uptrend. Eight markets, including Japan, Hong Kong and China, are in an Uptrend Under Pressure. Three markets are in a Rally Attempt, and one is in a Downtrend. APAC markets are consolidating.
  • Small-and mid-cap (SMID) stocks are outperforming across APAC ex China. This trend is most pronounced in India. Among SMID stocks in India, low P/E stocks are leading over the short term. We recommend investors be selective regarding Indian small- and mid-cap stocks as they are very extended.
  • For SMID stocks across APAC, outperformance has been driven by the Energy and Retail sectors. Among SMID stocks, stocks with higher EPS Rank have outperformed. Refer to page 10 for a list of near-pivot small- and mid-cap stocks in APAC ex-China.
  • Highlighted Focus List Idea: Dixon Technologies (DIX.IN; DIXON IN).

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 resistance between $68 and $69 earlier in the week, then retraced gains on Wednesday. We have a positive view of APAC markets. Look for indices to hold above short-term moving averages. Focus on ideas with rising relative strength and constructive price action.
  • Eight markets, including Japan, Hong Kong, India and China, are in a Confirmed Uptrend. Taiwan is in an Uptrend Under Pressure. Four markets, including Indonesia, are in a Rally Attempt.
  • Over the last ten years, the Nikkei gained 40% while the Topix gained only 2%. The spread between the two indices has increased significantly since 2019. Recently, the TOPIX made a new 52-week high, while the Nikkei has yet to retake its high. The recent TOPIX outperformance has been accompanied by outperformance of the MSCI Japan value index over the growth index.
  • Stocks with a lower price to sales (P/S) ratio continue to lead in Japan. Year-to-date outperformance is still being driven by large cap stocks. However, over the last four weeks, mid and small cap stocks have outperformed. Rotation into the Retail, Basic Material and Health Care sectors is noticeable during this period. Refer to page 10 for stocks near pivot in Japan.
  • Highlighted Focus List Idea: Shift (SHFT.JP; 3697 JP). 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 21-DMA support and is testing June highs. We have a positive view of APAC markets. Most markets are in a Confirmed Uptrend given China’s follow-through day. Focus on ideas with rising relative strength and constructive price action.
  • Eight markets, including Hong Kong, China and India, are in a Confirmed Uptrend. Japan is in an Uptrend Under Pressure. Four markets, including Indonesia, are in a Rally Attempt.
  • We shifted Hong Kong to a Confirmed Uptrend from an Uptrend Under Pressure after the Hang Seng rose 4.3% on higher d/d volume on Tuesday, in a follow-through day-like manner on Tuesday. Market sentiment was driven by the politburo meeting, with the Chinese government signaling stimulus measures to support the economy.
  • The Energy sector is entering the top-right quadrant of the APAC sector rotation graph, indicating improvement over four weeks and outperformance over 26-weeks. We see outperformance in the Oil & Gas-Intl. Expl. & Prod. and Energy-Coal industry groups. Refer to page 9 for minicharts of near-pivot stocks from the Energy sector.
  • Highlighted Focus List Idea: NHPC (NHD.IN; NHPC IN). Refer to page 6 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 above all key moving averages and is testing its June highs. We have a positive view of APAC markets. Continue to focus on ideas with rising relative strength and constructive price action.
  • Six markets, including India, Australia, Taiwan and South Korea, are in a Confirmed Uptrend. Japan and Hong Kong are in an Uptrend Under Pressure. Five markets, including China, are in a Rally Attempt.
  • Except for China, major emerging markets such as India, South Korea, and Taiwan are outperforming given the weakness in the U.S. Dollar index. During the last 12 years, China has only had a major deviation from other major emerging markets twice, for three to six months. However, on both occasions, it subsequently aligned with the other major emerging markets, with its performance turning positive. Refer to pages 3 and 4 for a detailed analysis. Refer to the charts on pages 9 to 12 for a historical performance comparison of emerging markets.
  • The Technology sector continues to lead across APAC despite a pullback over the past four weeks. Breadth in the sector remains intact and we have seen an improvement in the median RS Rating for Technology stocks over the past four weeks. Refer to page 15 for a list of stocks trading near pivot from the Technology sector.
  • Highlighted Focus List Idea: SK Hynix (HYI.KR; 000660 KS).

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) has been consolidating above its 200-DMA over the past two weeks. Distribution days remain elevated, and we expect markets to consolidate in the short term. Focus on ideas with rising relative strength and constructive price action.
  • India is in a Confirmed Uptrend. Japan, Hong Kong, South Korea and Taiwan are in an Uptrend Under Pressure. Eight markets, including China and Australia, are in a Rally Attempt.
  • Japan, Taiwan and South Korea have pulled back from their 52-week highs. The percentage of stocks trading above their 50-DMA has declined over the past four weeks. However, breadth remains healthy with more than 50% of stocks trading above their 200-DMA. All sectors, except Consumer Staple and Health Care, continue to have a majority of stocks above key moving averages.
  • India continues to be an outlier with the Sensex close to an all-time high. Breadth continues to improve, and weekly breakouts are trending above the one-year average. Refer to page 9 for a list of near-pivot ideas from India, Japan, Taiwan and South Korea.
  • Highlighted Focus List Idea: Britannia (BRI.IN; BRIT IN).

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 attempting to hold above its converging 50- and 100-DMAs at ~$67. The index is forming a flat base with a pivot at the January high of $73.1 (+9%). We have a positive view of APAC markets.
  • Japan, India and Taiwan are in a Confirmed Uptrend. Hong Kong and South Korea are in an Uptrend Under Pressure. Eight markets, including China and Australia, are in a Rally Attempt.
  • Year-to-date, the MSCI Japan value and growth indices have gained 22% and 24%, respectively. Both indices have largely performed in line with each other. Much of the year-to-date outperformance has come from stocks with a price to sales (P/S) ratio below 2. Large cap stocks have led while mid and small cap stocks have underperformed. Stocks with a higher EPS Rank (>80) have also outperformed significantly.
  • The Capital Equipment, Consumer Cyclical and Technology sectors have outperformed year-to-date. These sectors also continue to lead in the short term.
  • We recommend investors look for ideas with a strong EPS Rank that are breaking out of a sound base, or bouncing off their 21- or 50-DMA support. Refer to page 10 for stocks near their pivot in Japan.
  • Highlighted Idea: Tokyo Electron (RG@N.JP; 8035 JP)