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) found support after making a new 52-week low. It has immediate resistance along its declining 21- and 50-DMA (+1%). We maintain a cautious and patient approach. Look for further confirmation across APAC awaiting follow-through days. Several markets will remain closed for most of the week and will need to catch up upon reopening. Continue to focus on ideas with rising relative strength.
  • Four markets including Japan are in a Confirmed Uptrend. Five markets including Hong Kong, India, and Taiwan are in an Uptrend Under Pressure. Australia and New Zealand are in a Rally Attempt, while China and South Korea are in a Downtrend.

APAC Weekly Summary

Posted on by Derek Higa

• The MSCI Asia ex. Japan index (AAXJ) rolled over after facing resistance along its declining 100-DMA. It has breached its 50- and 21-DMA and is trading near a 52-week low. We recommend a patient and cautious approach. Reduce risk in ideas failing to hold above key moving averages or logical support.
• Four markets, including Hong Kong, are in a Confirmed Uptrend. Four markets, including India and Taiwan, are in an Uptrend Under Pressure. China, Australia, South Korea, Japan, and New Zealand are in a Downtrend. Southeast Asian markets, including Thailand, Indonesia, Singapore, and the Philippines, are holding up well on a relative basis.
• Over the past eight weeks, Energy, Financial, Utility, and Basic Material have outperformed based on price performance. On the flip side, Health Care and Retail are underperforming. We recommend that investors focus on ideas which are displaying improving relative strength and are trading on the right side of bases. Refer to 7 and 8 for stocks near pivot from leading sectors. Most ideas included have low betas and a good dividend yields.
• Highlighted Focus List Idea: Emperador ( TSI.PH; EMP PM ). Refer to page 5 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) rolled over after resistance along its declining 100-DMA ($85.6; +3%) and has breached its 50-DMA. We recommend a cautious approach due to increasing distribution and weak price action in major markets.
  • Nine markets, including Hong Kong, India, Australia, and Taiwan, are in a Confirmed Uptrend. China and New Zealand are in an Uptrend Under Pressure. South Korea is in a Rally Attempt and Japan is in a Downtrend.
  • The Energy sector has been leading over the last four to eight weeks. Majority of this outperformance is driven by the Oil & Gas Exploration/Production industry group. Oil & Gas has been outperforming since March 2021, driven by a steady increase in oil prices. Historically, oil price has been positively correlated with inflation. So, we recommend a cautious approach to the sector as Fed expects inflation to cool down this year and oil price faces multiple resistance levels between the current price and $100/barrel. Avoid extended stocks. Refer to page 12 for stocks near pivot from Energy.
  • Light Sweet Crude (0COIL) has broken above 2018 levels (+11%). However, the Global energy sector (IXC) has yet to retake its 2018 levels. The Energy sector in Europe and APAC have led the U.S. This is mostly due to a higher weight of renewable energy stocks within APAC and Europe. We believe Renewable energy will remain a key theme within Energy sector in the long term.

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 21-DMA and is looking to retake its 50-DMA. We continue to recommend a gradual approach to allocating risk.
  • Nine markets, including Hong Kong, India, Australia, Japan, and Taiwan, are in a Confirmed Uptrend. Three markets, including China, are in an Uptrend Under Pressure. South Korea is in a Rally Attempt. We shifted Hong Kong to a Confirmed Uptrend last week. It had a more assertive follow-through day on Wednesday. The Hang Seng’s price action is encouraging and could be an early signal of a bottom.
  • MSCI Asia Pacific Value index has been outperforming the Growth index over the last one year and the spread has increased over the last few weeks.
  • Financial stocks are under accumulation across APAC. Notably, banks are outperforming in Taiwan, Singapore, and Hong Kong. The outperformance across Financial is in line with rising interest rates; a similar trend witnessed during January 2012 to December 2014 and June 2016 to December 2017 when 10-year bond yield increased. Refer to page 10 for a list of near pivot ideas from the financial sector.
  • Highlighted Focus List Idea: Bajaj Finance (BJF.IN; BAF 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.

 

  • We have become more positive on APAC markets as major markets have been upgraded or shifted back to a Confirmed Uptrend. Seven markets, including India, Australia, Japan, and Taiwan, are in a Confirmed Uptrend. Four markets, including China, are in an Uptrend Under Pressure. South Korea and Hong Kong are in a Rally Attempt.
  • 2021 Recap: India and Taiwan were the best performing markets. China and Hong Kong’s performance was negative and lagged other major markets. Thailand was the best performer among smaller markets. Refer to page 13 for a list of the large-cap constituents of major indices that have outperformed in 2021.

APAC Market Update

Posted on by Derek Higa

Key points from this report:

 

  • We are upgrading India to a Confirmed Uptrend from a Rally Attempt after the Sensex staged a day-10 follow-through day. The index rose 1.6% on higher day-over-day volume. We will look for the index to hold above its 50-DMA and clear above resistance along 59,203 and 61,036.
  • In anticipation of continued market volatility, we recommend investors take a gradual approach to increasing risk in India. Focus on ideas that are breaking out of sound bases with an upward trending RS line. Refer to page 3 for ideas.
  • Over the past eight to 13 weeks, Technology and Capital Equipment have outperformed. However, today’s move was led by Financial and Transportation stocks.
  • Actionable Focus List ideas include Infosys (INE.IN; INFO IN), Larsen and Toubro Infotech (LR1.IN; LTI IN), Radico Khaitan (RKT.IN; RDCK IN), Allcargo Logistics (CLG.IN; AGLL IN), Tube Investments Of India (TF.IN; TIINDIA IN), and Pidilite Industries (PID.IN; PIDI IN)

Tesla

Posted on by Derek Higa

Key points from this note:

 

  • Tesla shares are forming right side of a stage-three consolidation base (pivot: $1,243.5) and attempting to break above resistance between $1,170 and $1,200. A break above $1,200 provides an aggressive entry to add to positions.
  • Shares regained momentum on strong Q4 delivery performance. It had a record quarterly delivery of 308.6K units (+71% y/y), beating estimates of 267K by 16%. This was its sixth consecutive quarter of record deliveries. Model 3/Y deliveries increased 84% y/y to 297K.
  • For FY21, it delivered 936.2K units (+87% y/y), beating estimates by 4%. The company had not provided specific delivery targets for the year. However, it has set a target of 50% average annual growth in vehicle deliveries over a multi-year horizon.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

  • The MSCI Asia ex. Japan index ( AAXJ ) found support off its recent low and retraced back to declining 21-DMA resistance. We continue to recommend a cautious approach. Reduce risk in stocks failing to hold above logical support levels or finding resistance along key moving averages.
  • Six markets are in an Uptrend Under Pressure, including Australia, China, and Japan. Four markets, including Hong Kong, India, and South Korea, are in a Rally Attempt. Taiwan, New Zealand, and Indonesia are in a Confirmed Uptrend.
  • While most major APAC markets are still vulnerable, Australia and Taiwan are among the best performing. They have a higher proportion of leading stocks trading above their 50- and 200-DMA compared with all major APAC markets. Furthermore, they have a higher percentage of stocks trading near 52-week highs and continue to have broadening breakout trends across the region over the past month.
  • Outperformance in Australia and Taiwan is led by mid- and small-cap stocks. Basic Material in Australia and Technology in Taiwan are among the leading sectors over the past four to 13 weeks. Also, Financial ideas in both markets are trading close to 52-week highs. Refer to page 15 for a list of near-pivot ideas in Australia and Taiwan.
  • Highlighted Focus List ideas: WiseTech Global ( WTC.AU; WTC AU ) and Chailease Holding ( CLI.TW; 5871 TT ).

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 has been trending downward since February highs and forming lower highs and lower lows. It is trading below all key moving averages and is 20% off highs.
  • Six markets are in an Uptrend Under Pressure, including China, Australia, India, and Japan; three are in a Rally Attempt, including Taiwan and South Korea; and India and Hong Kong are in a Downtrend. New Zealand and Indonesia are in a Confirmed Uptrend.
  • This week, we downgraded India to a Downtrend for the first time since March 2020. Net outflow of money from institutional investors is the highest since 2007 as foreign investors have been selling since April. Only ~20% of stocks are trading above their 50- and 200-DMA, compared with ~70% in mid-October. Weakness is across market caps and the number of breakouts has declined.

APAC Weekly Summary

Posted on by Derek Higa

Attached is an APAC Market Update from Director, Research Analyst Derek Higa and William O’Neil India Analysts.

  • We downgraded India to a Downtrend from an Uptrend Under Pressure as the Sensex declined 2% on heavy volume and registered its ninth distribution day.  Hawkish comments by central banks worldwide accompanied by increasing foreign institutional selling is contributing to poor technical price action.
  • The Sensex breached support at November lows of ~56,400 and has immediate support at its 200-DMA (-2.5%).
  • We advise investors to take a cautious and defensive approach. Avoid or trim positions in ideas that have broken logical levels of support on heavy volume.
  • Refer to page 4 for Indian ideas holding above support levels and page 5 for leading stocks that have broken key support and are now lagging.