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.

 

  • This is our last note for 2019. Our next note will be published on January 8, 2020.
  • Last Friday, we shifted Hong Kong, China, and South Korea to a Confirmed Uptrend from an Uptrend Under Pressure.
  • Seven of thirteen markets are in a Confirmed Uptrend and the average number of distribution days declined to 3.4 from 5.7, relieving pressure.
  • We recommend investors stay disciplined and avoid chasing extended ideas as a majority of markets test resistance at April highs.
  • Year-to-date, six markets have gained by double digits; China leads the pack with a 34% gain. Refer to page 3 for a Comparison Graph of APAC Markets.
  • Our APAC Focus List count increased 3x over 2018 this year. Refer to page 5 for an APAC Focus List breakdown by geography and sector.
  • Refer to page 6 for key themes to keep on your radar in 2020.
  • Highlighted Focus List ideas: Sk Hynix ( HYI.KR ) and Nintendo ( NNDO.JP ). Refer to pages 8 and 10 for annotated charts.
  • Refer to page 11 for APAC Actionable ideas.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

 

 

  • The MSCI Asia ex Japan bounced back from its 200-DMA on low volume. We expect the markets to remain in consolidation mode this week as the December 15 tariff deadline approaches.
  • Four of 13 markets are in a Confirmed Uptrend, six are in an Uptrend Under Pressure, two are in a Rally Attempt, and one is in a Downtrend.
  • Hong Kong Health Care stocks have pulled back recently. However, stocks are still constructive, trading 7% on average above their 200-DMA. In contrast, the Hang Seng index is trading 3.5% below its 200-DMA. We remain positive on Health Care. The pullback could remain constructive, which could provide an aggressive buy point to add to positions.
  • Rotation and improved momentum in Basic Material and Capital Equipment stocks is occurring. Refer to page 6 for stocks trading near a pivot in these sectors.
  • Refer to page 7 for actionable ideas in APAC.
  • Highlighted idea: Asian Paints ( API.IN ). Refer to page 5 for annotated chart.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

  • Four of 13 markets are in a Confirmed Uptrend, six are in an Uptrend Under Pressure, two are in a Rally Attempt, and one is in a Downtrend. Distribution has elevated in the short term.
  • We shifted Australia to an Uptrend Under Pressure from a Confirmed Uptrend.
  • We remain cautious on the Hong Kong market amid rising distribution days. Health Care has pulled back after significant gains, but we believe the action is constructive. Refer to page 4 for the Hong Kong sector rotation graph.
  • Stick with preferred markets. Japan, India, and Taiwan are leading markets in our view. In Japan, Capital Equipment stocks are outperforming.

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.

 

  • Three out of 13 markets are in a Confirmed Uptrend. We shifted China, South Korea, and Singapore to an Uptrend Under Pressure. Overall, average distribution in APAC has elevated to slightly above four days this week.
  • Japan, India, and Taiwan are the only markets in a Confirmed Uptrend and continue to show leadership as they trade near all-time highs. Although we continue to be bullish on the China A-share market, we are noticing some weak action among leaders that could raise caution.
  • Revisiting value versus growth in Japan, value stocks have gained significantly since August, however, their six-month performance remains below that of growth stocks.
  • The Health Care, Basic Materials, and Capital Equipment sectors are displaying momentum. See page 8 for Capital Equipment stocks near pivot.
  • Refer to page 9 for actionable ideas on our Focus List.
  • Highlighted Focus List idea: Keyence ( KEYE.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 Hang Seng is still in an Uptrend Under Pressure — refer to page 5 for an annotated chart. Headlines of civil unrest in Hong Kong are creating some upheaval, but not all is bad. We recommend staying overweight Health Care.
  • In Hong Kong, Health Care, Consumer Cyclical, Consumer Staple, and Financial stocks are holding up the best in a difficult market environment. Top-rated stocks have held up relatively better.
  • Refer to page 6 for the Hong Kong Sector Rotation Chart highlighting noticeable rotation and the progression of outperformance in the Health Care sector since May.
  • Highlighted Focus List idea: Wuxi Biologic Cayman ( WXBO.HK ). Refer to page 8 for an annotated chart.
  • See page 9 for top-rated stocks near pivot in Hong Kong.
  • Actionable ideas can be found on page 10.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

  • The MSCI Asia has finally pulled back after rallying for six weeks. We shifted Hong Kong back to an Uptrend Under Pressure, leaving six out of 13 APAC markets in a Confirmed Uptrend.
  • The average number of distribution days in APAC increased to 3.4 from 2.0 in the last week. In the last five trading sessions, Hong Kong and South Korea registered three distribution days.
  • Prior to this week, there had been steady improvement in the number of stocks breaking out.
  • Japan’s market is in a Confirmed Uptrend with two distribution days and is currently extended after strong gains since September. Approximately 82% of liquid stocks in Japan are trading above their 200-DMA, compared with only 55% in APAC. The number of extended stocks is higher among small caps and Technology. Refer to page 8 for a list of extended stocks in Japan.
  • Refer to page 9 for actionable ideas in APAC.

Disney

Posted on by Derek Higa

Key points:

 

  • Disney shares are forming a stage-two flat base and are currently trading 3% below a pivot. We recommend investors aggressively add to positions as shares rise above short-term resistance of $141. The stock is constructively building the right side of a base.
  • Today, shares are rising on news that Disney+ surpassed 10M sign-ups on the first day of its launch (guide was for 60M–90M worldwide by FY24). We continue to believe the combination of Hulu, ESPN+, and Disney+ will put Disney among the most appealing value options for users cutting the cord.
  • The company has moderate fundamental ratings: EPS Rank of 43, SMR Rating of
    B, Composite Rating of 69. Higher investments in the company’s DTC platform have affected EPS and margin.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

 

 

  • MSCI Asia is strengthening, now only 3% below its 52-week high from April.
  • APAC markets are improving: eight out of 13 markets are in a Confirmed Uptrend. The average distribution day count declined to 2.0 from 3.6 last week following market condition improvement on the back of U.S.–China trade deal optimism.
  • On November 4, we shifted Thailand and Hong Kong to a Confirmed Uptrend.
  • We reiterate that Japan, India, China, and Taiwan are our preferred overweight markets.
  • Japan is trading at 52-week highs, led by improvement in Basic Material, Consumer Cyclical, Health Care and stability in Retail. Refer to page 6 for the sector rotation chart and page 7 for an annotated chart of the Nikkei 225.
  • Highlighted Focus List idea: Fast Retailing ( RETA.JP ) is close to pivot. Refer to page 9 for an annotated chart.
  • Refer to page 10 for notable ideas near pivot in Japan.
  • Refer page 11 for actionable ideas on our Focus List.

 

  • MSCI Asia is strengthening, now only 3% below its 52-week high from April.
  • APAC markets are improving: eight out of 13 markets are in a Confirmed Uptrend. The average distribution day count declined to 2.0 from 3.6 last week following market condition improvement on the back of U.S.–China trade deal optimism.
  • On November 4, we shifted Thailand and Hong Kong to a Confirmed Uptrend.
  • We reiterate that Japan, India, China, and Taiwan are our preferred overweight markets.
  • Japan is trading at 52-week highs, led by improvement in Basic Material, Consumer Cyclical, Health Care and stability in Retail. Refer to page 6 for the sector rotation chart and page 7 for an annotated chart of the Nikkei 225.
  • Highlighted Focus List idea: Fast Retailing  ( 

     

    ) is close to pivot. Refer to page 9 for an annotated chart.

  • Refer to page 10 for notable ideas near pivot in Japan.
  • Refer page 11 for actionable ideas on our Focus List.

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.

 

  • Since October 15, the MSCI Asia ex Japan index has edged higher above the 200-DMA. With the Fed’s decision on deck, we remain cautiously optimistic.
  • This week we shifted India to a Confirmed Uptrend from an Uptrend Under Pressure. Japan has made new 52-week highs and Taiwan has reached all-time highs. New Zealand was shifted to an Uptrend Under Pressure.
  • Taiwan is in a Confirmed Uptrend with three distribution days. Five of 11 sectors are trading above their 200-DMA. We would like to see strength broaden across the sectors as the market continues to make new highs. Refer to page 6 for a chart of the Taiwan SE Weighted Index.
  • South Korea is in a Confirmed Uptrend with five distribution days. The index is trading 0.7% below its 200-DMA, which has been acting as stiff resistance since February 2018. Only Technology and Energy of 11 sectors are trading above their 200-DMA. Refer to page 7 for an annotated chart of the KOSPI.
  • Refer to page 8 for stocks near pivot in Taiwan and South Korea. Refer to page 9 for actionable ideas in APAC.
  • Highlighted stock: Koh Young Technology ( KYX.KR )