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) is trading constructively above its rising 10-DMA. We recommend a gradual approach to increasing risk. Focus on quality ideas with high relative strength as they break out of sound bases.
  • Nine of 13 markets, including Hong Kong, Japan, Australia, China and Taiwan, are in a Confirmed Uptrend. India is in an Uptrend Under Pressure. Three markets, including South Korea, are in a Rally Attempt.
  • In Japan, we have seen an improvement in the number of stocks trading above their 200-DMA over the past four weeks. However, the spread between the value and growth indices has only marginally changed since H2 2022, with growth lagging value over a one-year horizon. We would like to see an improvement in the number of stocks breaking out to raise our conviction in a longer-term rally.
  • Australia has gained 10% since its follow-through day in October. The number of weekly stock breakouts in Australia is significantly above the one- and three-year averages. Approximately 40% of stock breakouts in the last week were from the Basic Material sector.
  • Refer to pages 11 and 12 for stocks trading near pivot in Australia and Japan, respectively.
  • Highlighted Focus List Idea: Mineral Resources (MIN.AU; MIN AU). 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) has gained above its 200-DMA. We recommend a gradual approach to increasing risk. Focus on quality ideas with high relative strength as they break out of sound bases.
  • We upgraded Japan to a Confirmed Uptrend from a Rally Attempt after the Nikkei 225 staged a day nine follow-through day. Nine of 13 markets, including Hong Kong, Japan, Australia, China and Taiwan, are in a Confirmed Uptrend. India is in an Uptrend Under Pressure. Three markets, including South Korea, are in a Rally Attempt.
  • Gains in the MSCI Asia ex. Japan (AAXJ) were mostly driven by Hong Kong in the past eleven weeks. The Transportation, Financial, Utility, Basic Material and Technology sectors have outperformed. The market has continued to favor stocks with good fundamental ratings. Stocks with strong SMR Ratings outperformed over the trailing four weeks.
  • The number of weekly breakouts has improved but is still lower than the three-year average. A spike in weekly breakouts would raise conviction in a sustainable rally. Refer to page 10 for a list of stocks trading near pivot.
  • Highlighted Focus List Idea: Perseus Mining (PRU.AU; PRU AU). Refer to page 8 for an annotated chart.

APAC Weekly Summary

Posted on by Derek Higa

Key points:
• The MSCI Asia ex. Japan index (AAXJ) retook its 200-DMA for the first time since July 2021. We recommend a selective approach
to increasing risk. Gradually allocate risk to quality ideas with high relative strength as they break out of sound bases. Avoid
chasing extended ideas.
• Five of 13 markets, including Hong Kong, China and Taiwan, are in a Confirmed Uptrend. Four markets, including Australia and
India, are in an Uptrend Under Pressure. Japan, South Korea and Thailand are in a Rally Attempt. Indonesia is in a Downtrend.
• The Hang Seng has gained 47% from bottom to the peak in 10 weeks. The index has gained 4.6% per week, which is similar to
2009. Look for a short-term pullback in the index to remain constructive. Consolidation above the 21-DMA or the 50-DMA during
the pullback would be a positive signal. Currently, the distribution day count remains low. We will turn cautious if distribution
days cluster over a five-week period.

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 testing 200-DMA resistance. We recommend a cautious approach to adding risk. Most major markets continue to be choppy except for Hong Kong which has gained upside momentum. Stay patient in Under Pressure or Downtrend markets. Continue to reduce lagging ideas and those which are breaking below key moving averages or support. Focus on quality ideas which are still trading constructively above moving averages.
  • Three of 13 markets, including Hong Kong, are in a Confirmed Uptrend. Six markets, including Australia, China, India and Taiwan, are in an Uptrend Under Pressure. Indonesia and Thailand are in a Rally Attempt. Japan and South Korea are in a Downtrend.
  • India and Hong Kong are the best performing APAC market based on six and three month price performance, respectively. These two markets stand out as we enter 2023.
  • Across APAC, there has been an improvement in momentum of the Financial, Retail and Utility sectors over the last four weeks. Refer to page 11 for stocks near pivot in these sectors.
  • Highlighted Focus List Idea: Gulf Energy Development (GULF.TH; GULF TB). 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) pulled back from its 200-DMA resistance and breached its 21-DMA. We recommend a cautious approach to adding risk. Trim positions in lagging ideas that have fallen from their resistance levels, and are below support. Focus on constructive ideas that are above key moving averages with rising relative strength.
  • Five of 13 markets, including China, Hong Kong and India, are in a Confirmed Uptrend. Four markets, including Australia and Taiwan, are in an Uptrend Under Pressure. Indonesia and Thailand are in a Rally Attempt. Japan and South Korea are in a Downtrend.
  • The AAXJ underperformed both the S&P 500 and the Stoxx 600 this year due to weakness in China, Hong Kong, South Korea and Taiwan. India, Singapore and Indonesia are the only markets in positive territory YTD among 13 APAC markets.
  • In 2022, the biggest winners were mostly from India. Among sectors, Energy outperformed by a significant margin, while Health Care and Technology underperformed. For leading Industry Groups with high RS and 3-month RS ratings, see page 5. For near pivot ideas, see page 15.
  • Beginning in May, we added a steady number of ideas to our APAC Focus List. The majority of these additions were from India and China. There was a sharp increase in additions from the Consumer Staple sector.
  • Highlighted Focus List Idea: HDFC Bank (HFC.IN; HDFCB 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 testing its 200-DMA resistance. We recommend a cautious and selective approach to increasing risk. Markets continue to consolidate above key support levels and have remained constructive.
  • Nine markets, including Hong Kong, China, Japan, Taiwan and India, are in a Confirmed Uptrend. South Korea and the Philippines are in an Uptrend Under Pressure. Indonesia and Thailand are in a Rally Attempt.
  • India is the strongest APAC market based on YTD performance. The Sensex made an all-time high earlier this month. The index has pulled back on low volume and remains constructive above its rising 21-DMA support, which coincides with its prior high. We have seen net institutional buying since October, which is a positive signal in our view.
  • In the last 52-weeks, large cap stocks in India had a median gain of 9.6%. Mid and small cap stocks, as well as less liquid stocks, had a negative return over the last year. However, mid cap stocks have led over the last three months.
  • The Financial, Energy, Capital Equipment and Basic Material sectors have outperformed over the past four to eight weeks based on average price performance. Refer to page 11 for a list of stocks near pivot in India.
  • • Highlighted Focus List Idea: ICICI Bank (ICG.IN; ICICIBC 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) reclaimed its 100-DMA yesterday. To have increased conviction in the rally, we would like to see the index hold support at its 100-DMA and break above its 200-DMA.
  • We recommend a selective approach to increasing risk. With another move higher in today’s session, breadth is improving in the worst performing markets year-to-date. Hong Kong, Taiwan and Korea are now trading at two-month highs with next logical resistance 3-7% higher, or near their 200-DMAs.
  • The U.S. Dollar index is currently testing its 200-DMA support. Further weakness in the dollar is a positive signal for emerging markets.
  • Breadth has improved in the last four weeks driven by Hong Kong, Australia and Taiwan. We believe this is an encouraging sign. However, we are looking for improvement in stock breakouts to increase our level of conviction. Currently, the improvement in stock breakouts is driven by Japan. Look for breakouts to improve in lagging markets such as Hong Kong and Taiwan.
  • Clear leadership is lacking among sectors. We recommend investors focus on stocks with good fundamental ratings and breaking out of sound bases, regardless of the sector. Despite sector leadership changing weekly, we are seeing more breakouts from the Capital Equipment and Technology sectors. Refer to page 9 for a list of stocks trading near pivot.
  • Highlighted Focus List Idea: Shift Inc. (SHIFT.JP; 3697 JP).SHIFT.J

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 testing resistance at its 100-DMA after briefly reclaiming that level last week, for the first time since June 2021. We recommend a gradual approach to increasing risk. Focus on ideas that are building the right side of bases, or are now breaking out from sound bases with improving relative strength.
  • The MSCI Asia Pacific value index has led the growth index throughout his year. Spread has remained the same since March with the value index leading the growth index. The spread between value and growth remains the same despite the market bounce in the last few sessions. Refer to page 9 for stocks of interest with high 3-month RS Ratings.
  • The highest number of markets are in a Confirmed Uptrend since January 2021. In the last four years, more than 75% of the markets traded were in a Confirmed Uptrend on four occasions, excluding the current. On the previous occasions, strength was sustained with improvement in weekly stock breakouts. We are yet to see improvement in stock breakouts despite a record number of markets being in a Confirmed Uptrend. We believe the current strength will be short-lived if stock breakouts fail to improve.
  • 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 retook its 100-DMA for the first time since June 2021. We recommend a gradual approach to increasing risk. Look for indices to consolidate above key moving averages should a pullback occur. We recommend focusing on ideas that are building the right side of bases, or are now breaking out from sound bases with improving relative strength.
  • Ten markets, including Hong Kong, China, Japan, Taiwan, South Korea and India, are in a Confirmed Uptrend. New Zealand is in an Uptrend Under Pressure. Thailand and Malaysia are in a Rally Attempt.
  • Among major APAC markets, Hong Kong, China, South Korea and Taiwan have underperformed year-to-date. However, these markets have gained steam since making 52-week lows in September or October and have outperformed significantly month-to-date.
  • Based on the median 3-month RS Rating, the Health Care and Technology sectors have outperformed, followed by Basic Material and Capital Equipment. Refer to page 10 for a list of fundamentally sound ideas with high 3-month RS Ratings. We recommend investors wait for these stocks to retake their 200-DMA and form a base to be viewed as constructive.
  • Highlighted Focus List Idea: Samsung Biologics (BCS.KR; 207940 KS).