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 reclaimed its 21-DMA. However, it continues to find resistance below its 50-DMA. We recommend looking for ideas with leadership characteristics and avoiding extended ideas.
  • Four markets are in a Confirmed Uptrend, five are in an Uptrend Under Pressure, and four are in a Rally Attempt. The average number of distribution days has declined to less than 5 and currently stands at 4.8.
  • Value stocks have outperformed since the spread between growth and value peaked in February. Refer to page 7 for a price comparison chart of the MSCI Asia growth versus value indices.

Kakao

Posted on by Derek Higa

Key points from this report:

 

  • Kakao is actionable as it breaks out of a stage-three, seven-week consolidation base on heavy volume. The stock gained 8% today on its expansion plans in the paid content business.
  • Strong technical ratings: RS Rating of 90 and A/D Rating of A+. Up/Down Volume has remained near 2 for the last nine weeks, indicating accumulation on higher volume.
  • Today, reports suggested that the company is in talks to acquire Radish for $360M. Radish is the fifth-largest online cartoon platform in the U.S. It is also trying to acquire a majority stake in Tapas, the third-largest webtoon platform in the U.S. The company is expanding its IP content business globally as it can use quality IP content to produce TV series and films.

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 faces resistance at its falling 21-DMA. The 50-DMA has begun to trend downward. Follow a selective approach with a focus on high RS stocks emerging out of consolidation and avoid extended ideas.
  • Four of 13 markets are in a Confirmed Uptrend, five are in an Uptrend Under Pressure, and four are in a Rally Attempt. Yesterday we shifted Taiwan to a Confirmed Uptrend from an Uptrend Under Pressure. Refer to page 7 for an annotated chart of the TAIEX.
  • Despite Technology’s underperformance in the medium term, we see pockets of strength in Semiconductor and Tech Services, mainly from Taiwan and India. These stocks have a stable or improving RS Rating over the past 13 weeks.

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 consolidating below its 50-DMA. Next support is at the 100-DMA (-4%). We would like the index to reclaim its 50-DMA on good volume to turn positive.
  • In most APAC markets, Energy and Basic Material are now leading in the long term, taking the top spots from Retail and Technology. India and Japan are the exceptions, where the Technology sector is still leading over the trailing 52 weeks.
  • India, Japan, and Taiwan are the relative outperformers in the trailing eight weeks. Refer to pages 7–9 for an annotated chart of India’s Sensex, Japan’s Nikkei, and Taiwan’s TAIEX, respectively. Refer to page 10–12 for notable stocks from outperforming sectors in these markets.
  • Highlighted Focus List idea: Infosys (INE.IN; INFY: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 index is facing stiff resistance at the 21-DMA after falling below its 50-DMA (+2%). We recommend that investors remain cautious and continue to sell weak ideas trading below support levels.
  • Eight of 13 markets are in an Uptrend Under Pressure. Australia, Singapore, and Thailand are in a Confirmed Uptrend. New Zealand is in a Rally Attempt, while China is in a Downtrend.
  • Outperforming markets in the short term include India, Malaysia, Singapore, Taiwan, and Thailand. Refer to page 13 for our Index Price Performance Heat Map.
  • We removed 39 Focus List ideas (30% of total) in the last 10 sessions. Given the higher number of removals, we remain cautious. We do not recommend buying stocks near recent lows. Instead, be patient and wait for stocks to form new bases before turning constructive.

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 index is testing support at the 50-DMA. Be patient and let market volatility settle before increasing risk.
  • Ten markets are in an Uptrend Under Pressure, Australia and Taiwan are in a Confirmed Uptrend, and New Zealand is in a Rally Attempt. The average number of distribution days is elevated at five. If none are added, 20 distribution days will expire across 12 markets in the next five sessions.

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 declined 4% from highs and is testing 21-DMA support. We continue to recommend taking a selective approach. Focus on ideas breaking out of constructive consolidations and continue to trim or avoid ideas historically extended from key moving averages.
  • Australia, Japan, and Taiwan are in a Confirmed Uptrend. We shifted China, India, and Hong Kong to an Uptrend Under Pressure and downgraded New Zealand to a Downtrend.
  • The MSCI Asia Pacific Value index has been outperforming the Growth index since November. Growth has declined over the last few days while Value has held up relatively better. Over a one-year period, value continues to lag growth by a wide margin.
  • We are noticing a rotation out of long-term leading sectors such as Health Care and Technology into Basic Material, Consumer Cyclical, Energy, Financial, and Transportation sectors over the last four weeks.

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 at all-time highs. Focus on ideas breaking out of sound bases and avoid chasing extended stocks.
  • We shifted Taiwan and Hong Kong to a Confirmed Uptrend this week, taking the total number of markets in a Confirmed Uptrend to six.
  • Japan’s TSE Mothers Index has had a history of acting as an early indicator for broader market direction. In the past, healthy pullbacks have indicated a continued rally. Refer to pages 4 and 5 for a price comparison chart of the Mothers Index versus the Nikkei 225 and the Nikkei 500.
  • The average number of Japanese stocks breaking out since October 2020 remains above the six-year average for most sectors except Consumer Staple, Health Care, Retail, and Utility. These sectors have also underperformed on a relative basis.