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 bounced from 200-DMA support. We recommend staying patient and looking for the index to break above the 50-DMA to turn constructive.
  • The average number of distribution days increased to 5.0 from 4.8 last week. If there are no new distribution days in the next week, the average will fall to four.
  • We shifted China to a Downtrend from an Uptrend Under Pressure and India and Taiwan to an Uptrend Under Pressure from a Confirmed Uptrend.
  • Indian stocks had a mixed reaction to the country’s annual budget on February 1. Consumer goods companies are set to gain due to changes in the personal income tax structure. Refer to page 5 for an annotated chart of the Sensex.
  • Highlighted Focus List ideas: Hindustan Unilever ( HDL.IN ) and Asian Paints ( API.IN ).
  • Refer to page 10 for Indian stocks trading near pivot.
  • Refer to page 11 for APAC actionable ideas.

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 has declined ~6% in two weeks following rising fears related to the coronavirus. Profit-taking could just be normal in this stage of the rally, but support must hold constructively for the uptrend to remain intact. Continue to trim extended ideas.
  • Four out of 13 markets are in a Confirmed Uptrend, five are in an Uptrend Under Pressure, one is in a Rally Attempt, and three are in a Downtrend. The average number of distribution days has risen to 4.8 from 3.7 last week. The clustering of distribution days has become more concerning.
  • We have yet to remove a significant amount of ideas from our Focus List. A low number of removals amid market volatility could be a good indicator of continuing strength in leading ideas. This would be viewed as a positive signal to market conditions.
  • Rotation into Japanese REIT and Property ideas are notable. See page 13 for ideas.
  • Refer to page 12 for ideas looking weak in direct industries affected by the spread of coronavirus.
  • Highlighted Focus List ideas: Avenue Supermart (AS.IN), Info Edge (IEI.IN), and Bata India (BIN.IN)
  • Refer to page 14 for actionable ideas on our Focus List.

 

Global Media and Internet

Posted on by Derek Higa

Key points from this report:

 

  • Communications Services Select SPDR (XLC), like the S&P 500, is extended at 52-week highs and due for a pullback.
  • Looking across Internet and Media industry group rankings: Telecom groups have the highest rank while internet has improved in the short term. Leisure-Movies remain weakest.
  • OTT landscape continues to widen with the nationwide launch of CMCSA’s Peacock this July. Peacock takes a unique approach by incorporating an advertiser and user-friendly approach.
  • Disney (DIS) remains our top pick: strong box office in 2019; 2020 will be about Disney+ subscriber additions.
  • Conviction Laggard NFLX: we still have doubts about sub growth after mixed Q4 results.
  • Other OTT ideas include Focus List idea TTD, Conviction Laggard ROKU, and Interest List idea CCOI.
  • In social media, political ads will have an impact on ad revenue for those continuing to advertise: Focus List idea FB, Interest list ideas GOOGL, SNAP, and NXST.
  • Other ideas mentioned include Yandex ( YNDX ), Match Group ( MTCH ), Kakao ( DUM.KR ), and Naver ( NHN.KR ).
  • Other Conviction Laggards include Uber ( UBER ) and Yelp ( YELP ).

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

 

  • Leading markets have witnessed a pullback to their 21-DMA support. Although we remain constructive on markets, we advise investors to avoid chasing extended ideas and trim positions if held. Refer to page 13 and 14 for a list of extended stocks.
  • Eight out of 13 markets are in a Confirmed Uptrend, one is in an Uptrend Under Pressure, three are in a Rally Attempt, and one is in a Downtrend.
  • Markets have turned volatile again. The average number of distribution days has risen to 3.7.
  • Health Care stocks have outperformed in the short and long term, led by Hong Kong stocks. Refer to page 5 for Hong Kong sector rotation chart.
  • China stocks declined due to fear of a new viral epidemic. Hong Kong was downgraded by one notch at Moody’s. Refer to page 4 for an annotated chart for Hang Seng.
  • Refer to page 15 for actionable Focus List names.
  • Highlighted Focus List ideas: HEC Pharma ( YHEC.HK ), Shandong Weigao ( SDW.HK ).

Comcast

Posted on by Derek Higa

Key points:

 

  • Shares are forming an 18-week double bottom base and are trading 1% away from the pivot price. We recommend adding to positions in anticipation of momentum continuing through earnings results next week.
  • Solid fundamental ratings: Composite Rating of 97, EPS Rank of 92, and SMR Rating of A.
  • Technical ratings are improving, aided by an increase in Up/Down Volume ratio and positive A/D Rating.
  • Yesterday Comcast ( CMCSA ) unveiled details about its streaming platform Peacock at an investor conference. Peacock has a differentiated monetization strategy compared to its peers’ focus on ad-supported premium content. In the on-demand video segment, 65% of the content is ad-supported, but with growing subscriber fatigue, management believes the proportion of people willing to subscribe to numerous premium streaming services will decline. This provides an opportunity for a service with light ad-supported premium content at a lower subscription price point.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

 

 

  • The MSCI Asia is approaching two-year highs after recently breaking above April 2019 highs. There is no change to market conditions with a majority in a Confirmed Uptrend.
  • Major markets are trading near 52-week highs and are trading comfortably above their 21-DMA. We would not be surprised to see the start of a consolidation soon due to the recent hot streak. We recommend a disciplined approach, avoid chasing.
  • Stocks breaking out in APAC markets are rising steadily, approaching March 2019 highs.
  • South Korea is trading near resistance at April 2019 highs and is approaching 52-week highs. Technology, Consumer Staple, and Health Care stocks are leading while Energy stocks are lagging. Refer to page 4 for South Korea sector map and page 5 for an annotated Datagraph of the KOSPI.
  • Highlighted Focus List ideas: Kakao ( DUM.KR ) and Samsung Biologics ( BCS.KR ). Refer to page 7 and 9 for annotated Datagraphs, respectively.
  • Refer to page 10 for South Korea ideas trading near pivot.
  • Refer to page 11 for actionable Focus List ideas.

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.