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 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)

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 trading below its 50- and 100-DMAs. It has multiple levels of resistance along ~$67. We have a positive view of APAC markets. Focus on ideas that are trading within the pivot range of their bases, and that are holding above logical price support with rising relative strength.
  • Japan, India, Taiwan and South Korea are in a Confirmed Uptrend. Hong Kong is in an Uptrend Under Pressure. Seven markets, including China and Australia, are in a Rally Attempt. Thailand is in a Downtrend.
  • Look for markets, including Japan and Taiwan, to hold above near-term support levels to remain constructive. Chinese markets are trading below all their key moving averages.
  • Stocks with a higher RS Rating (>80) declined by more over the last two weeks than stocks with a lower RS rating. The larger decline was led by stocks in Hong Kong and Taiwan. However, we have not seen a major breakdown of leaders yet.
  • The Capital Equipment and Consumer Cyclical sectors are entering the top-right quadrant of the APAC rotation graph, indicating outperformance over a 26-week period and improvement in momentum over a four-week period. Refer to page 9 for a list of stocks near their pivots in these sectors.
  • Highlighted Focus List Idea: Tube Investments of India Ltd (TF.IN; TIINDIA 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) pulled back from a four-month high and is testing its 100-DMA support. We have a positive view of APAC markets. Continue to focus on quality growth ideas which are breaking out of sound bases. Avoid extended ideas.
  • Japan, India, Taiwan and South Korea are in a Confirmed Uptrend. Hong Kong is in an Uptrend Under Pressure. Eight markets, including China and Australia, are in a Rally Attempt.
  • The Sensex is trading close to an all-time high. Breadth across India is improving with 76% of stocks trading above the 200-DMA. Breadth is better across large and mid caps. However, small caps have outperformed over the past 8-26-weeks based on average price performance. Institutional investors have turned net buyers in 2023 after being net sellers last year.
  • In India, the Capital Equipment, Health Care and Retail sectors have outperformed based on their three-month RS Rating. We also see strength in certain Financial Industry Groups. Refer to page 9 for near-pivot ideas.
  • Highlighted Focus List Idea: Larsen & Toubro (LST.IN; LT IN).

APAC Market Update

Posted on by Derek Higa

Key Points:

 

  • We upgraded Hong Kong to a Confirmed Uptrend from a Rally Attempt after the Hang Seng index staged a day-10 follow-through day. The index rose 2.2% on volume higher than the prior session and cleared above its 50-DMA resistance. Refer to page 2 for the annotated chart of the Hang Seng index.
  • We advise investors gradually allocate capital and increase risk in Hong Kong. Look for improvement in breadth. Focus on stocks breaking out of sound bases with a rising relative strength. Refer to page 3 for a list of near pivot ideas in Hong Kong.
  • Large-cap stocks will need time to become actionable. Those setting up constructively above moving averages include Tencent (TCNT.HK; 700 HK) and Baidu (BAID.HK, 9888 HK).
  • We have a positive view of APAC markets. Strength has broadened to nearly all major markets. Five out of 13 APAC markets, including Hong Kong, Japan, India, and Taiwan, are in a Confirmed Uptrend. Eight markets, including Australia, are in a Rally Attempt.

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) retook its 100-DMA. We recommend a selective approach. Focus on ideas in constructive markets that are trading within the pivot range of recent bases with rising relative strength.
  • Japan, India, Taiwan and South Korea are in a Confirmed Uptrend. Nine markets, including Hong Kong, China and Australia, are in a Rally Attempt.
  • Breakouts over the last ten weeks were higher in APAC ex China compared to the U.S. and Europe. In APAC, breakouts have largely been similar across large, mid and small caps. However, the number of stocks forming bases is higher among large caps. Refer to pages 8-10 for a list of large-, mid- and small- cap stocks that are near pivot.
  • A higher proportion of breakouts have come from the Capital Equipment, Technology, Financial and Consumer Cyclical sectors. Nearly two-thirds of breakouts were in Japan and India. In terms of stocks forming bases, we are noticing a higher proportion from the Financial sector. Hong Kong stands out among major markets.
  • Highlighted Focus List Idea: CS Wind (CTW.KR; 112610 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 is 8% off-highs and is testing resistance along its 100-DMA ($68). Focus on markets in a Confirmed Uptrend and ideas which are trading within the pivot range with rising relative strength.
  • Japan, India, Taiwan and South Korea are in a Confirmed Uptrend. Seven markets, including Hong Kong and Australia, are in a Rally Attempt. China and Malaysia are in a Downtrend.
  • Japan is extended in the near term, but not as extended as it was in 2021. We expect the market to consolidate in the near term while broadening occurs.
  • Technology, Capital Equipment and Consumer Cyclical are the most extended sectors currently. These sectors account for 75% of year-to-date performance for liquid Japanese stocks. The Financial, Energy and Transportation sectors are less extended compared with 2021.
  • Refer to page 7 for stocks trading near pivot in Japan.
  • Highlighted Focus List Idea: Sysmex (TOAF.JP; 6869 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) fell below its 200-DMA and made two-month lows. Most major APAC markets remain constructive, while Chinese markets are weak. We recommend a selective approach. Focus on ideas that are trading within the pivot range of sound bases with rising relative strength. Refer to page 9 for a list of stocks near pivot in Confirmed Uptrend markets.
  • Japan, India, Taiwan and South Korea are in a Confirmed Uptrend. Six markets, including Australia and Singapore, are in a Rally Attempt. China, Hong Kong and Malaysia are in a Downtrend.
  • In the U.S., the relative outperformance of Technology has been pronounced. Similarly in APAC, outperformance is concentrated in the Technology and Capital Equipment sectors. We recommend investors avoid chasing extended ideas. Refer to page 8 for mini charts of examples of extended Technology stocks.
  • On a market cap-weighted basis, APAC stocks have gained 9.1% year-to-date on average. By sector and country, Technology and Japan accounted for around half of this price performance, respectively. Look for broadening or improvement in performance in more sectors and markets to provide higher conviction in the rally.
  • Highlighted Focus List Idea: TSMC (TSM.TW; 2330 TT).