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) 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

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 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

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) 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

Posted on by Derek Higa

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.

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) breached its 200-DMA and is testing resistance along that level. We recommend a selective approach. Look for markets to bounce off logical support and rise above their resistance levels.
  • Four markets, including Japan and South Korea, are in a Confirmed Uptrend. Five markets, including China, Hong Kong and India, are in an Uptrend Under Pressure. Four markets are in a Rally Attempt.
  • CES 2025, which is taking place this week (January 6–10), features prominent semiconductor companies. Multiple announcements have been positive catalysts for stocks in the semiconductor space, including MediaTek (MDT.TW) and SK Hynix (HYI.KR).
  • Technology remains on the right side of the sector rotation graph for APAC, i.e., it has been outperforming over the last 26 weeks. Semis and Hardware-related industry groups are driving Technology leadership, which is more prominent in Japan, Taiwan and Hong Kong.
  • Refer to page 10 for a watchlist of Technology stocks across APAC that are outside the Focus List.
  • Highlighted Focus List Idea: TSMC (TSM.TW; 2330 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 (AAXJ) breached its 200-DMA and is testing its recent low of $72. We recommend a selective approach. Look for markets to rise and hold above their resistance levels. Focus on stocks that are holding above key moving averages near recent pivots, with rising relative strength.
  • Four markets, including Japan and India, are in a Confirmed Uptrend. Four markets, including China and Hong Kong, are in an Uptrend Under Pressure. Five markets, including South Korea, are in a Rally Attempt. India was upgraded to a Confirmed Uptrend from a Rally Attempt.
  • Hong Kong’s Hang Seng Index is consolidating around its 50-DMA. Liquid stocks in Hong Kong have held above their 200-DMA despite recent volatility. The number of near-pivot ideas in Hong Kong is close to a 52-week low, and we would adopt a patient and selective approach.
  • Taiwan was 2024’s best performing APAC market, rising 28.5%. TSMC (TSM.TW) was a large contributor to this performance. The Transportation sector, followed by Health Care and Technology, lead other sectors based on median 3-month RS Rating in Taiwan.
  • South Korea’s KOSPI continues to decline along its falling 50-DMA, and was the worst performing major APAC market in 2024. It remains vulnerable amid political uncertainty. Health Care stocks are holding up well in the declining market.
  • Refer to pages 14 and 15 for a list of near-pivot stocks (outside the Focus List) across major APAC markets.
  • Highlighted Focus List Idea: BYD Electronics (BYDE.HK; 285 HK). Refer to page 9 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) is holding above its 200-DMA support. We recommend a selective approach. Look for markets to rise and hold above their 50-DMA. Focus on stocks holding above key moving averages that are near recent pivots with rising relative strength.
  • Singapore is in a Confirmed Uptrend. Six markets, including China, Hong Kong and Japan, are in an Uptrend Under Pressure. Six markets, including India and South Korea, are in a Rally Attempt.
  • India’s Sensex is testing key support along its 200-DMA. Small- and mid-cap indices are holding up well relatively. The Q3 earnings season and FY26 Budget in early February are the key upcoming market catalysts.
  • Technology, Health Care and Retail are in the top-right quadrant (Outperforming and Improving) of the sector rotation chart for India. Refer to page 10 for a list of constructive leaders with rising relative strength in India.
  • Highlighted Focus List Idea: Affle (AFL.IN; AFFLE 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 Ex Japan index (AAXJ) breached its 100-DMA support and the next support is along its 200-DMA. We recommend a selective approach. Wait for markets in a Rally Attempt to follow through before increasing risk. Focus on stocks that are emerging out of sound bases with rising relative strength.
  • Australia and Singapore are in a Confirmed Uptrend. Six markets, including China, Hong Kong, and Japan, are in an Uptrend Under Pressure. Four markets, including India, are in a Rally Attempt. The Philippines is in a Downtrend.
  • The Bank of Japan is set to announce its interest rate decision on Thursday after the U.S. Fed’s interest rate decision on Wednesday. The BOJ indicated that another interest rate hike is likely in the near term as economic data have come in in line with expectations. Consensus expects the Bank of Japan to keep the interest rate unchanged at 0.25%.
  • Japan’s Nikkei 225 has been consolidating above key moving averages since the end of September and faces resistance around 40,000. Japan’s Nikkei 225 has risen 17.6% year to date and has been the second-best leading APAC market in 2024.
  • Large-cap stocks in Japan lead other market-cap categories based on the median RS Rating in Japan. The median RS Rating across sectors has improved greatly over the last four weeks. Technology followed by Consumer Cyclical leads the other sectors based on median RS Rating. Refer to page 12 for a list of stocks in Japan that are constructive near pivot setups with a good technical profile.
  • Highlighted Focus List Idea: Fast Retailing (RETA.JP; 9983 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) briefly traded above its 50-DMA but failed to hold above it. We recommend a selective approach. Focus on stocks that are emerging out of sound bases with a rising relative strength.
  • Australia and Singapore are in a Confirmed Uptrend. Six markets, including China, Hong Kong, and Japan, are in an Uptrend Under Pressure. Four markets, including India, are in a Rally Attempt. South Korea is in a Downtrend.
  • China’s Politburo meeting on Monday signaled a significant shift in its monetary policy stance, which was changed to “appropriately loose” from “stable”. The outcome of the meeting will be announced tomorrow (Thursday). We will look for China and Hong Kong indices to rise and hold above their 50-DMA to turn more constructive.
  • China has held up relatively well compared with Hong Kong during the recent pullback. Additionally, the pullback in China was relatively short-lived. The drawdown of the Hong Kong and China indices was similar to the results of our historical study.
  • There has been a noticeable improvement in RS Rating across sectors in HK over the past four weeks. Technology, Retail, and Financial are some of the notable sectors that are outperforming. Refer to page 14 for a watchlist of stocks from Hong Kong that are trading closer to pivot or entry points.
  • Highlighted Focus List Idea: Trip.com (TRCG.HK; 9961 HK). Refer to page 8 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) closed slightly above its 100-DMA and is 9% off highs. We recommend a selective approach. Wait for markets in a Rally Attempt to follow-through before increasing risk. Focus on stocks that are emerging from sound bases with rising relative strength.
  • Three markets, including Australia, are in a Confirmed Uptrend. Five markets, including China, Hong Kong and Japan, are in an Uptrend Under Pressure. Four markets, including India and South Korea, are in a Rally Attempt. Indonesia is in a Downtrend.
  • We looked at the impact of Trump’s tariff announcements on the stock market during his first term as president. The MSCI Emerging Markets Asia index (EEMA) declined in the initial months post the tariff announcements in March 2018, and was volatile until the end of 2019. During this period the U.S. Dollar Index rose, but U.S. markets were also volatile. Currently, the U.S. Dollar Index is rising and is at a key resistance level.
  • Australia is one of the leading APAC markets over the last four to 52 weeks. The ASX index has been in a Confirmed Uptrend / Uptrend Under Pressure since Dec 2023. The outperformance was led by the Financial sector which constitutes ~32% of the index. Large cap Basic Material stocks continue to trade below their 200-DMA.
  • Large caps lead in Australia based on median 3-month RS Rating. Technology, followed by Capital Equipment and Health Care, leads other sectors based on median 3-month RS Rating. Refer to page 11 for a watchlist of stocks in Australia.
  • Highlighted Focus List Idea: QBE Insurance (QBE.AU; BE AU).