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) 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).

APAC Weekly Weekly

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 breached its 200-DMA on heavy volume and is testing support at that level. We recommend taking a more cautious approach and trimming laggards that have failed to hold above logical support levels and extended ideas trading well above key moving averages.
  • Yesterday, we shifted Japan back to a Downtrend from a Rally Attempt. Four of 13 markets are in a Confirmed Uptrend, four are in an Uptrend Under Pressure, four are in a Rally Attempt, while one is in a Downtrend.
  • Technical similarities of the MSCI Asia ex. Japan index (AAXJ) to those of 2018 are raising cautionary signals today. In 2018, the index consolidated with lower highs near its 40-WMA after a major run in 2017. It then corrected significantly. Refer to page 6 for annotated chart of the AAXJ index.

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.

 

  • Five markets, including India, South Korea, and Taiwan, are in a Confirmed Uptrend. Three are in an Uptrend Under Pressure, including China. Five markets, including Japan and Hong Kong, are in a Rally Attempt.
  • Japan’s Nikkei 225 index has been trading in a downward channel since February. It bounced off its 200-DMA on low volume and is currently testing resistance along its 50-DMA. Hong Kong’s Hang Seng index has been consolidating since February. It bounced off its recent lows on below average volume and is clinging to its 200-DMA.
  • In APAC, leadership remains unclear between value and growth. The trend is similar in Japan, however, both indices have been more volatile. In Hong Kong, the MSCI Growth index remains the clear leader with a wide performance gap from the Value index over the past year.

APAC Market Update

Posted on by Derek Higa

Key points from this report:

 

  • We are downgrading Hong Kong to a Downtrend from an Uptrend Under Pressure. The Hang Seng was down 2.9% on above average volume and registered its eighth distribution day. The index has declined for the eighth consecutive session and breached its 200-DMA for the first time since November 2020.
  • We recommend a cautious and selective approach while trading stocks in Hong Kong. The Hang Seng must first establish and hold a new low for three days before a follow-through day can occur.
  • Mega-cap names have lagged and are trading below their key moving averages.
  • Over the past four to eight weeks, Consumer Staple, Financial, Retail, and Technology have lagged. However, recently the index is being dragged down by Technology stocks in particular.
  • On the flip side, we continue to notice areas of strength outside of Technology where ideas are holding above key support levels. Some industry groups that have showcased strength include Retail/Wholesale – Automobile, Retail – Apparel/Shoes, and Apparel – Shoes & Rel Mfg. Refer to page 6 for notable names holding up well from leading industry groups.
  • Focus List ideas holding up well near pivot of their recent base include L’Occitane International (LOIS.HK; 973 HK), Sunac Services (SUSH.HK; 1516 HK), and Prada (PRAD.HK; 1913 HK). Refer to page 4 for minicharts of stocks in Hong Kong that are holding up well.

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.

 

  • Five markets, including India, South Korea, and Taiwan, are in a Confirmed Uptrend. Four are in an Uptrend Under Pressure, including China and Hong Kong. Japan, Indonesia, and New Zealand are in a Rally Attempt, while Malaysia is in a Downtrend.
  • The TAIEX, KOSPI, and Sensex are trading near 52-week highs. Leadership in Taiwan and South Korea is concentrated in fewer stocks. Bellwether names like TSMC (TSM.TW) and Samsung Electronics (SGL.KR) are lagging, trading more than 10% below 52-week highs.
  • In India, 64% of stocks are trading within 10% from their 52-week high. The number of breakouts is significantly above the five- and 10-year averages. However, this is mostly led by less liquid stocks. Refer to pages 11–12 for mini charts of ideas with the best technical setup in Taiwan, Korea, and India (FL ideas highlighted).

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 is testing resistance at the 100-DMA after breaking above the downward channel in May. We recommend that investors focus on quality ideas that have formed sound bases, are trading above their key moving averages, and are at proper entry points.
  • India, South Korea, and Taiwan are the top-performing markets, while China, Japan, and Hong Kong are trading in a range-bound fashion. Shipping stocks are driving the rally in Taiwan. Internet companies lead in South Korea.
  • Since mid-June, growth stocks are slightly leading the value stocks over the past year. Refer to page 7 for a price performance chart for these indices.
  • Select stocks have improved in Technology, however, a majority are still lagging. RS Rating has declined for 61% of Tech stocks from four and eight weeks ago.
  • Refer to pages 10 and 11 for stocks (market cap >$5B) with improving and declining RS Rating from four and eight weeks ago, respectively.
  • Refer to page 8 for mini charts of mega-cap tech stocks holding up well.
  • Highlighted Idea: Tokyo Electron (RG@N.JP).