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) 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).

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 below September lows and made a new 52-week low. We recommend a cautious approach to adding risk. We have become more skeptical of a meaningful rally beginning in the near term, as more markets fail to hold above recent lows. Keeping to our rules, some markets are still in position for follow-through days.
  • India is in an Uptrend Under Pressure. Seven markets, including China, Hong Kong, and Taiwan, are in a Downtrend. Five markets, including Japan, Australia, and South Korea, are in a Rally Attempt.
  • The MSCI Asia Pacific small cap index has performed better than the large cap index since August. Its year-to-date performance is not materially better than the large cap index.
  • We see improving momentum in the Consumer Staple sector over the past four weeks. Food-related industry groups are leading within the Consumer Staple sector. Refer to page 10 for stocks of interest in the Consumer Staple sector.
  • Highlighted Focus List Idea: Rohto Pharmaceutical (XP@N.JP; 4527 JP). 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) continues to trade at a 52-week low. Next support could be near March 2020 lows of $53 (-10%). We recommend a cautious approach to adding risk. Markets could stage a counter-trend rally at oversold levels. However, we recommend staying patient and waiting for a follow-through day before allocating risk.
  • India and Indonesia are in an Uptrend Under Pressure. Nine markets, including Japan, China, Hong Kong, South Korea and Taiwan, are in a Downtrend. Singapore and Thailand are in a Rally Attempt.
  • Indonesia and India remain the leading markets across APAC. On a sector basis, breadth remains low. There is notable outperformance in industry groups with reopening themes. Refer to page 7 for stocks of interest from the leading industry groups.
  • Hong Kong and Macau have signaled their reopening intentions with concrete steps over recent weeks. We are seeing the gaming, lodging and travel categories in the leisure segment significantly outperform the broader Hang Seng index.
  • Highlighted Focus List Idea: Samsonite (SAM.HK; 1910 HK).

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 closed down for a sixth consecutive session and is trading at a 52-week low. We recommend a cautious and defensive approach to adding risk. Be patient and look for a follow-through day as an initial signal for a sustainable rally.
  • India and Indonesia are in an Uptrend Under Pressure. Ten markets, including Japan, China, Hong Kong, South Korea and Taiwan, are in a Downtrend. Thailand is in a Rally Attempt.
  • There has been notable improvement in momentum of the Financial, Consumer Cyclical and Retail sectors over the last four weeks.
  • The Financial sector is leading across APAC ex. China except in Hong Kong and Taiwan. Most leading names are from Japan, followed by India, Indonesia and Thailand. Refer to pages 8 and 9 for a list of leading ideas from the sector. Refer to pages 10, 11 and 12 for mini-charts of notable stocks from these markets.
  • Highlighted Focus List Idea: Bajaj Finance (BJF.IN; BAF 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 trading at a 52-week low. We continue to recommend a cautious approach to adding risk. A counter-trend rally could occur in the near term, but we believe it will provide another opportunity to reduce positions. Focus on ideas with defensive characteristics and rising relative strength.
  • India is in a Confirmed Uptrend. Five markets, including Japan and Indonesia, are in an Uptrend Under Pressure. Six markets, including China, Hong Kong, Australia, South Korea and Taiwan, are in a Downtrend. Thailand is in a Rally Attempt.
  • The Consumer Cyclical, Financial and Retail sectors saw improved momentum in the last four weeks. We see strength in Covid-related reopening themes in the Consumer Cyclical and Retail sectors. We have provided a list of leading industry groups and notable names on page 10 and 11. However, the number of stocks near pivot is low across APAC. Look for improvement in stock breakouts before increasing risk.
  • Highlighted Focus List Idea: Samsonite (SAM.HK; 1910 HK).