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 living below its 200-DMA ($93.4; +4%). It is testing resistance trading below its 50-DMA ($88.8). We continue to recommend a selective approach. Allocate risk in select markets, focusing on constructive ideas with rising relative strength.
  • Five markets, including Japan, Australia, and India, are in a Confirmed Uptrend. Four are in an Uptrend Under Pressure, including South Korea and China. Four markets, including Hong Kong and Taiwan, are in a Rally Attempt.
  • Hong Kong’s Hang Seng is in a Rally Attempt and remains weak and vulnerable. It could be at another inflection point after facing resistance along its 50-DMA (26,366; +3%). Refer to page 7 for an annotated chart of the Hang Seng.
  • Technology and casino stocks are under heavy pressure again due to regulatory fears, but more concerning is China Evergrande’s liquidity crisis.
  • Over the past few weeks, Hong Kong stocks have come under pressure again after rising from lows. However, there are pockets of strength among the Basic Material, Capital Equipment, Energy, and Utility sectors.
  • Refer to page 8 for ideas with rising RS in Hong Kong and page 9 for timely short ideas.
  • Highlighted idea: Hong Kong Exchanges & Clearing (HKEX.HK; 0388 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 cleared above 50-DMA ($89.4; -1%) resistance. It is still trading 2% below its 200-DMA ($96.3). We recommend a selective approach. Allocate risk in select markets, focusing on constructive ideas with rising relative strength.
  • Six markets, including Japan, Australia, South Korea, and India, are in a Confirmed Uptrend. Three are in an Uptrend Under Pressure, including China. Four markets, including Hong Kong and Taiwan, are in a Rally Attempt.
  • Both the MSCI Japan value and growth indices have risen sharply in the near term, depicting broad strength across Japan. Large caps have outperformed mid- and small-cap ideas based on median RS Rating as well as median price performance over the past 13 weeks.
  • We are observing improving momentum among Basic Material, Capital Equipment, Health Care, and Technology stocks in Japan. Refer to page 10 for stocks near pivot from these sectors.
  • Highlighted Focus List idea: Tokyo Electron (RG@N.JP). See 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) has retaken its 21-DMA ($87.20; -2%). It has immediate resistance along its declining 50-DMA ($89.70; +1%). Overall market sentiment is still cautious. A follow-through day in South Korea is encouraging, but we prefer to see strength broaden to other markets before taking a gradual approach in allocating risk.
  • Five markets, including Australia, South Korea, and India, are in a Confirmed Uptrend. Three are in an Uptrend Under Pressure, including China. Five markets, including Hong Kong, Japan, and Taiwan, are in a Rally Attempt.
  • India continues to be an outlier and is trading at a new all-time high. It has gained 95% since the follow-through day in March 2020. We are noticing more participation of liquid stocks in the rally while less liquid stocks have pulled back. However, it is notable that breadth remains low despite the market making a new high. Also, we are observing deviating performance between the index and liquid stocks. A decreasing number of breakouts and an increase in failed breakouts despite a market rally could be a cautionary signal. Overall, we recommend a selective approach given the extended nature of the market.

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 from its recent low (84; -4%) and retraced back to 21-DMA resistance. Next resistance is along its declining 50-DMA ($90.3; +4%). We recommend a cautious and patient approach. Focus on quality ideas with constructive technical setups.
  • Four markets, including Australia and India, are in a Confirmed Uptrend. Three are in an Uptrend Under Pressure, including China. Six markets, including Hong Kong, Japan, South Korea, and Taiwan, are in a Rally Attempt.
  • Weakness has broadened across APAC. Only Basic Material, Capital Equipment, and Utility have gained in the last eight weeks.
  • Moreover, the number of breakouts has declined in recent weeks. The most significant declines are in Taiwan and Korea. The number of breakouts has declined broadly across APAC sectors.
  • Select industry groups, particularly those that are defensive in nature, are outperforming. Refer to pages 7 and 8 for stocks near pivot in leading industry groups.
  • Highlighted Focus List idea: Sysmex (TOAF.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) rolled over after testing resistance along $90. It has immediate support at July’s low of $84.4. Overall, our market sentiment is turning more cautious. We continue to recommend a patient and selective approach.
  • Three markets, including Australia and India, are in a Confirmed Uptrend. Three are in an Uptrend Under Pressure, including China and South Korea. Six markets, including Hong Kong and Japan, are in a Rally Attempt. Taiwan is in a Downtrend.
  • In the near term, both the MSCI APAC Growth and Value indices have shown signs of broad weakness, which could become a larger cause for concern.
  • Weakness has broa

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 support along December 2020’s low of $86 (-3%) and has been consolidating along ~$88. We continue to recommend a patient and selective approach.
  • Five markets, including Australia, China, India, and South Korea, are in a Confirmed Uptrend. Two are in an Uptrend Under Pressure, including Taiwan. Six markets, including Hong Kong and Japan, are in a Rally Attempt.
  • Australia has significantly outperformed other developed APAC markets over the past three months. This is driven by outperformance in Financial as an economic rebound and ample stimulus packages have acted as tailwinds for the sector. Also, Basic Material stocks have continued to outperform. Refer to page 12 for minicharts of outperforming stocks in Australia.

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 found support along the December 2020 low of $86 (-3%) and is attempting to retrace back to its 200-DMA ($91.6; +3%). We recommend a patient and selective approach.
  • Five markets, including China, India, and South Korea, are in a Confirmed Uptrend. Two are in an Uptrend Under Pressure, including Taiwan. Five markets, including Hong Kong and Japan, are in a Rally Attempt, while Malaysia is in a Downtrend.
  • The Basic Material, Capital Equipment, and Consumer Cyclical sectors are outperforming. Stocks in the Basic Material sector are leading over the past two months, led by specialty chemicals and mining companies. There is a high number of stocks breaking out from Basic Material. India and China contribute 63% of these breakouts.
  • Refer to page 8 for stocks near pivot in leading sectors.

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 declined 8% below its 200-DMA on heavy volume. We recommend a selective approach while focusing on leading markets like India and South Korea and a defensive approach in Downtrend markets such as China and Hong Kong.
  • Four of 13 markets are in a Confirmed Uptrend, while three each are in an Uptrend Under Pressure, Downtrend, and Rally Attempt. We downgraded China and Hong Kong shifted to a Downtrend on Monday. Yesterday, we shifted Taiwan to an Uptrend Under Pressure from a Confirmed Uptrend as the index undercut its 50-DMA.

APAC Market Update

Posted on by Derek Higa

Key points from this report:

 

  • We are upgrading Hong Kong to a Confirmed Uptrend from a Rally Attempt after the Hang Seng staged a day 10 follow-through day. The index was up 1.8% on higher day-over-day volume. We would look for the index to clear immediate resistance and retake key moving averages for increased conviction.
  • We recommend investors take a gradual and selective approach to increasing risk in Hong Kong as strength progresses. Refer to page 5 for a list of stocks near pivot.
  • Mega-cap names are still weak and we would like these stocks to retake key moving averages before becoming constructive on them. Notable names holding up better include Anta Sports Products (ANIT.HK; 2020 HK) and Wuxi Biologics Cayman (WXBO.HK; 2269 HK).
  • Actionable Focus List ideas include Hong Kong Exchanges and Clearing (HKEX.HK; 388 HK), L’Occitane International (LOIS.HK; 973 HK), and Simcere Pharmaceutical (SIPG.HK; 2096 HK).