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) 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).

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 rallied off October lows and is currently testing resistance along its 50-DMA. We recommend a gradual approach to increasing risk. Look for indices to consolidate above key moving averages should a pullback occur. We would like to see strength broaden to more ideas to raise conviction on a sustainable rally. Continue to selectively increase risk in quality ideas with improving relative strength.
  • Ten markets, including Hong Kong, China, Japan, Taiwan and India, are in a Confirmed Uptrend. Three markets, including Singapore, are in a Rally Attempt.
  • We have seen improved momentum in the Health Care, Capital Equipment, Technology and Basic Material sectors over the last four weeks. Refer to page 6 for an annotated Rotation Graph. Refer to page 8 for stocks of interest from improving sectors.
  • Momentum has declined for the Consumer Staple, Utility and Transportation sectors. Most of these underperformers are concentrated in Hong Kong. Refer to page 7 for an annotated Rotation Graph.
  • Highlighted Focus List Idea: Sojitz (NIIW.JP; 2768 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) bounced off its 52-week low and is currently testing its 21-DMA resistance. We recommend gradually increasing risk in the markets trading in a Confirmed Uptrend. Selectively increase risk in quality ideas with improving relative strength, post their earnings result.
  • Seven markets, including Japan, India, Australia, and South Korea, are in a Confirmed Uptrend. Four markets, including Taiwan, are in a Rally Attempt. Hong Kong and China are in a Downtrend.
  • India and Japan are leading among the markets in a Confirmed Uptrend. These markets have more than 50% of their liquid stocks trading above 200-DMA. Within them, we see outperformance in large cap stocks.
  • Retail, Technology, and Energy are leading over the past four weeks. Refer to page 7 for the list of stocks trading near pivot in the markets in a Confirmed Uptrend.
  • Highlighted Focus List Idea: Trent (LAM.IN; TRENT 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) gapped down and broke below mid-October lows. It is trading at a new 52-week low. We continue to recommend a cautious approach to adding risk. Indices are attempting to rally off recent lows. Australia, Japan, and India remain the most resilient of the major markets.
  • Australia, Japan, and Indonesia are in a Confirmed Uptrend. India is in an Uptrend Under Pressure. Five markets, including South Korea, are in a Rally Attempt. Four markets, including Hong Kong and China, are in a Downtrend.
  • Year-to-date, Australia is the third-best performing major market in APAC, behind India and Japan. The Australian dollar has also performed well compared with the YTD performance of other major currencies in APAC.
  • We see outperformance in the Basic Material and Energy sectors in Australia, while Financial, Retail, and Utility lag. Refer to page 9 for a list of stocks of interest from Australia.
  • Highlighted Focus List Idea: Mineral Resources (MIN.AU; MIN AU).

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 a new 52-week low and is testing resistance along its declining 21-DMA. We continue to recommend a cautious approach to adding risk. Continue to stay patient, or implement a gradual approach.
  • Japan and Australia are in a Confirmed Uptrend. India is in an Uptrend Under Pressure. Seven markets, including Hong Kong, China, and South Korea, are in a Rally Attempt. Singapore, Taiwan, and New Zealand are in a Downtrend.
  • Last week, Japan reopened its borders to foreign tourists for the first time since the onset of the pandemic. Travel and tourism represented ~8% of the country’s GDP in 2019. A weaker yen makes it attractive for tourists to visit Japan, particularly those from China and the U.S.; the yen has depreciated 37% since 2019.
  • Among Japanese travel and leisure-related industry groups, the majority of stocks in the Leisure Services, Airline, and Travel Booking industry groups are trading lower than 2019 levels. However, many of these stocks are now trading constructively, following the easing of COVID restrictions. Refer to page 7 for stocks of interest from travel and leisure industry groups.
  • Highlighted Focus List Idea: Visional Inc (VIS1.JP; 4194 JP).