Key points:
• The MSCI Asia Ex Japan index (AAXJ) has found support along the confluence of its 50- and 200-DMA. We recommend a cautious approach amid
tariff uncertainty. Stay patient and wait for volatility to settle and for indices to hold or consolidate above logical support levels. Reduce positions in
stocks that are failing to hold above logical support levels and marking lower lows.
• Hong Kong is in a Confirmed Uptrend. South Korea and Singapore are in an Uptrend Under Pressure. Six markets, including Japan and Taiwan, are in
a Downtrend. Four markets, including China and India, are in a Rally Attempt.
• Hong Kong is the best-performing major market across the globe in 2025, gaining 18.6% year to date, while China has gained 0.2%. The divergence
is explained by mega-cap Technology stocks that are listed only in Hong Kong. Japan, India and the U.S. are the significant underperformers. Refer
to page 11 for a list of near-pivot leaders (RS > 70) in Hong Kong.
• From a historical perspective, China has outperformed the U.S. despite declines in U.S. markets in the past. Currently, China is outperforming the
U.S. by 6.3% based on rolling three-month returns. China’s relative outperformance versus the U.S. tended to reverse after touching ~20% in the
past, which implies room for near-term outperformance from China.
• We are yet to see rotation into defensive stocks in the APAC Ex China and Hong Kong region. On a median basis, low-PE, high-dividend-yield and
low-beta stocks are not outperforming other categories. Refer to page 12 for a list of defensive ideas in APAC outside China and Hong Kong. These
have low beta (<1) and a high dividend yield (>2.5%) and have a 3M RS Rating of above 70.
• Highlighted Focus List Idea: Tencent Holdings (TCNT.HK; 700 HK). Refer to page 8 for an annotated chart.
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
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 resistance along the December 2024 high of $77.5 and breached its 100- and 200-DMA. We recommend a cautious approach amid tariff uncertainty. Wait for volatility to settle and for indices to hold above logical support levels.
- Hong Kong and Singapore are in a Confirmed Uptrend. South Korea and Taiwan are in an Uptrend Under Pressure. Five markets, including China, are in a Rally Attempt. Four markets, including Japan and India, are in a Downtrend.
- Chinese indices have outperformed the U.S. markets since the stimulus announcements by China in late-September 2024. China’s Two Sessions set a 5% GDP growth target and the highest budget deficit since 2010, signaling a strong commitment to economic stimulus. Look for further policy details at the ongoing Two Sessions meeting.
- Despite recent tariff hikes under the Trump Administration, Chinese markets have remained resilient, driven by strong performance of the Technology sector. Since 2019, China has reduced its reliance on U.S. exports, shifting towards ASEAN and other regions.
- The initial market rally in Hong Kong has been led by Technology stocks, but as more stimulus measures are introduced, look for strength to broaden. Health Care and Technology, followed by Financial, are leading in the near term as measured by their median three-month RS Rating. Refer to page 12 for stocks of interest in Hong Kong.
APAC Weekly Summary
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 after testing resistance at its December 2024 high of $77.5, and is 9% off highs. We recommend a cautious approach. Look for markets to hold above logical support levels. Focus on stocks that are holding above key moving averages with rising relative strength.
- Three markets, including Hong Kong and South Korea, are in a Confirmed Uptrend. Four markets, including Japan and Taiwan, are in an Uptrend Under Pressure. Three markets, including China, are in a Rally Attempt. Three markets, including India, are in a Downtrend.
- Japan’s Nikkei 225 rebounded from the Yen carry trade unwinding-related fall in August 2024, and has been rangebound between 37,700-40,400. Since the start of 2025, value stocks are outperforming growth stocks in Japan.
- The Bank of Japan continues to raise interest rates as inflation comes in line with its forecast. Appreciation of the Yen and rising Japanese interest rates, along with weakening macro data in the U.S., increases the possibility of further unwinding of Yen carry trades in global markets.
- Prior leaders in Japan before the August 2024 selloff, like Energy and Utility, were the lagging sectors in the last six months. Transportation followed by Technology and Financial, are the leading sectors in this rangebound market.
- Refer to page 12 for a list of high Relative Strength ideas in Japan. These are trading above key moving averages, are under accumulation and have rising relative strength (Relative Strength > 80).
- Highlighted Focus List Idea: Yonex (YONX.JP; 7906 JP). Refer to page 7 for an annotated chart.
APAC Weekly Summary
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 and is above all key moving averages. Focus on stocks that are holding above key moving averages with rising relative strength.
- Five markets, including Hong Kong and South Korea, are in a Confirmed Uptrend. Four markets, including Japan, India and Taiwan, are in an Uptrend Under Pressure. Four markets, including China, are in a Rally Attempt.
- Technology is in the top-right quadrant of the sector rotation chart. Multiple catalysts over the past month, including the success of DeepSeek, have resulted in Technology’s outperformance. NVDA’s results next week will be a key catalyst.
- The outperformance of Technology is more pronounced in Hong Kong. Hardware-, Software-, Internet- and Telecom-related Industry Groups have led gains. In Japan, software and internet groups are leading within Technology. In South Korea and Taiwan, semiconductor related-Industry Groups are leading.
- Refer to page 11 for a list of Technology leaders across APAC markets.
- Highlighted Focus List Idea: ASE Technology (AIH.TW; 3711 TT). Refer to page 8 for an annotated chart.
APAC Weekly Summary + HK Resurgence + BYD
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 50- and 200-DMAs and is 10% off highs. We recommend a cautious approach as markets continue to be volatile following the announcement of tariffs. Focus on stocks that are holding above key moving averages with rising relative strength.
- The strength of the U.S. Dollar has led to underperformance of Emerging APAC markets. India, Thailand, Malaysia, Indonesia and the Philippines are making 52-week lows. The U.S. Dollar Index pulled back from highs and is testing support at its 50-DMA.
- The Hang Seng Index has cleared multiple resistance levels and is the leading APAC market in 2025. Large caps have led the gains since the Hang Seng’s low in January. We need to see breadth stabilize and improve going forward. The Two Sessions meeting in early March is the next catalyst for the market.
- Multiple catalysts, such as DeepSeek, subsidies for consumer electronics, Ablibaba’s LLM model and BYD’s unveiling of its intelligent driving system, are positive for Technology stocks, and have led to their outperformance. Currently, 79% of Technology stocks have an RS Rating of above 70.
- Refer to page 11 for a list of leaders in Hong Kong which have an RS Rating of above 80, and have gained more than 10% year-to-date. Refer to page 12 for a watchlist of Chinese ADRs with constructive technical setups.
- Highlighted Focus List Idea: BYD ‘H’ (BYD.HK; 1211 HK). Refer to page 8 for an annotated chart.
APAC Weekly Summary
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 along the confluence of its 50- and 200-DMAs. We recommend a cautious approach as markets are likely to be volatile following the announcement of tariffs.
- Four markets, including Hong Kong and India, are in a Confirmed Uptrend. Five markets, including Japan, South Korea and Taiwan, are in an Uptrend Under Pressure. Four markets, including China, are in a Rally Attempt.
- We upgraded India to a Confirmed Uptrend from a Rally Attempt after the Sensex staged a day-7 follow-through day. Look for the index to rise and hold above its 50- and 200-DMAs to increase conviction. It should form higher lows and higher highs given the last follow-through day in early-January failed.
- Breadth continues to be narrow. Breakouts and near-pivot stocks remain close to multi-year lows. Foreign Institutional Investors in India also continue to be net sellers.
- The Indian FY26 Union Budget continued fiscal consolidation, increased capex by 10% and introduced major personal tax reforms. This move aims to reduce the middle-class tax burden and boost consumer spending. Refer to page 14 for stocks of interest in India.
- Highlighted Focus List Idea: Eicher Motors (ECH.IN; EIM IN). Refer to page 9 for an annotated chart.
APAC Weekly Summary
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 is 12% off highs. We recommend a patient and cautious approach. Major markets are trading closer to key moving averages. Focus on stocks that are holding above key moving averages with rising relative strength.
- Four markets, including Hong Kong and South Korea, are in a Confirmed Uptrend. Four markets, including Japan and Taiwan, are in an Uptrend Under Pressure. Three markets, including India, are in a Downtrend. China and Thailand are in a Rally Attempt. Several markets are closed for holidays this week.
- The success of DeepSeek has raised concerns about reduced future investment in AI infrastructure. This has led to a selloff in chip manufacturing stocks in the U.S. and Japan. We expect a sharp pullback in Taiwan and South Korea when these markets open after the Lunar New Year holidays.
- Financial and Consumer Cyclical are the leading sectors in Japan based on median 3-month RS Rating. Within Technology, semiconductor-related stocks underperformed over the last week, while software stocks gained. Refer to page 9 for minicharts of large cap AI- and data center-related ideas in Japan that have come under pressure.
- Health Care, followed by Consumer Cyclical, leads other sectors in Australia based on median 3-month RS Rating. Refer to pages 10 and 11 for stocks of interest in Japan and Australia. These are trading above key moving averages and have rising relative strength (RS Rating > 70).
APAC Weekly Summary
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 recent low and is testing its 200-DMA resistance. We recommend a patient and cautious approach. Focus on stocks that are holding above key moving averages with rising relative strength.
- Four markets, including Hong Kong and South Korea, are in a Confirmed Uptrend. Four markets, including Japan and Taiwan, are in an Uptrend Under Pressure. Four markets, including China, are in a Rally Attempt. India is in a Downtrend.
- We upgraded Hong Kong to a Confirmed Uptrend from a Rally Attempt after the Hang Seng staged a day-six follow-through day. Look for the index to hold above its 50- and 100-DMAs. It should form higher lows and higher highs.
- Breadth in Hong Kong improved w/w and we are noticing a slight uptick in near-pivot stocks. A follow-through day is an initial positive indicator and is encouraging for market sentiment. However, we need to see improvements in stocks near pivot and breadth to increase our conviction in a sustainable rally.
- Technology, followed by Capital Equipment and Financial are the leading sectors in Hong Kong based on median RS Rating. Electronics- and Investment-Related industry groups are notable outperformers. Refer to page 11 for stocks of interest in Hong Kong.
- Highlighted Focus List Idea: BYD Electronics (BYDE.HK; 285 HK).
APAC Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- The MSCI Asia Ex Japan index (AAXJ) continued to decline below its 200-DMA and is below all its key moving averages. Major markets are breaking below logical support levels. Focus on stocks that are holding above key moving averages with rising relative strength.
- Three markets, including South Korea, are in a Confirmed Uptrend. Four markets, including Japan and Taiwan, are in an Uptrend Under Pressure. Four markets, including India, are in a Downtrend.
- The number of global markets shifted to a Downtrend or remaining in a Downtrend / Rally Attempt continues to rise. Breadth across APAC Ex China continues to narrow and is at its lowest level over the last 26-weeks. In the near term, South Korea is the only market that has seen improvement in breadth. The number of stocks near pivot across APAC is at a three-year low.
- Taiwan is at its key 200-DMA support level. TSMC results on January 16 could dictate the direction of Technology stocks. India decisively broke below its 200-DMA after a failed follow-through day and remains vulnerable in our view.
- We recommend investors a cautious approach across APAC markets. Trim positions in prior leaders that are breaking below logical support levels. Refer to page 13 for stocks in major APAC markets that have held up well with good technical profiles.
- Highlighted Focus List Idea: Samsung Biologics (BCS.KR; 207940 KS).
APAC Market Update
Hong Kong, China, and India were downgraded to a Downtrend from an Uptrend Under Pressure. We recommend a cautious approach to adding risk. Wait for the indices to establish a new low and eventually stage a follow-through day.
The Hang Seng declined 1% on higher d/d volume and added its eighth distribution day. It closed below its November 2024 low of 19,054 and continued to decline below its 100-DMA. It is 19% off highs, with next support along its 200-DMA (18,600). Refer to page 3 for an annotated chart of the Hang Seng Index.
The Sensex declined 1.4% on higher d/d volume and added its fourth distribution day. It closed below the November low of 76,802. The index is 11% off highs and is below all its key moving averages. Next major support is near 75,100 (April 2024 highs). Refer to page 4 for an annotated chart of the Sensex 30.
After today’s status change, three markets, including Japan and South Korea, are in a Confirmed Uptrend. Three markets, including Taiwan, are in an Uptrend Under Pressure. Five markets are in a Downtrend and two markets are in a Rally Attempt.
