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:

 

 

 

  • We have turned more cautious on APAC as several major markets (Australia, India, Hong Kong) have shifted to an Uptrend Under Pressure and average distribution continues to rise in consecutive weeks.
  • Five out of 13 markets are in a Confirmed Uptrend, four are in an Uptrend Under Pressure, two are in a Rally Attempt, and two are in a Downtrend.
  • We shifted Australia and India to an Uptrend Under Pressure from a Confirmed Uptrend and downgraded Indonesia to a Downtrend.
  • Despite an increase in volatility recently, the number of Focus List removals has not increased significantly. Resilience in China A Share ideas has contributed thus far.
  • Highlighted Focus List ideas: Samsung Electronics ( SGL.KR ) and Taiwan Semiconductor Manufacturing ( TSM.TW ). Refer to pages 5 and 7 for annotated charts, respectively.
  • Refer to page 8 for actionable ideas in APAC.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

 

 

 

  • Seven of 13 APAC markets are in a Confirmed Uptrend, three are in an Uptrend Under Pressure, two are in a Rally Attempt, and one is in a Downtrend. We remain cautious overall on APAC markets amid increasing volatility and the clustering of distribution.
  • China is in a Confirmed Uptrend with an elevated five distribution days. Hong Kong is in an Uptrend Under Pressure with just one distribution day and is trading below its key moving averages. Refer to pages 6 and 7 for annotated charts of the CSI 300 and Hang Seng, respectively.
  • Chinese ADR were under pressure last week following news of potential investment restrictions by the U.S. government. The KWEB ETF, which tracks Chinese internet companies, continues to weaken, exhibiting resistance at its 40-WMA. Refer to pages 8  and 9 for annotated charts and comparisons with the S&P 500, CSI 300, and Hang Seng. Page 10 has an annotated chart for Alibaba ( BABA ).
  • Highlighted Focus List ADR: ZTO Express ( ZTO ). Annotated chart on page 5.
  • Refer to page 11 for a list of Chinese ADR holding well above their 200-DMA as well as those with the highest negative alerts.
  • See page 12 for actionable ideas in APAC.

APAC Market Update

Posted on by Derek Higa

Key points:

 

  • We are upgrading India to a Confirmed Uptrend from a Rally Attempt today after the index staged a day-five follow-through day. The index gained 1% on higher volume than the previous session and almost 20% higher than average. Since the corporate tax rate cuts were announced on Friday, September 20, the index has rallied ~8% on strong volume and is trading 3% off highs. The average volume for the past five sessions is 60% greater than the last 50 trading days’ average volume. We believe investor sentiment has turned constructive following Friday’s 5% gain, the largest single-day gain in almost a decade.
  • We recommend selectively allocating capital to growth ideas that are at entry points and not chasing extended ideas. Look for entries along pullbacks to moving averages or near-term price support.
  • See our note for growth ideas in India with high EPS growth, high ROE, and tax rates greater than 30% in the previous fiscal year.

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.

 

  • Six out of 13 markets are in a Confirmed Uptrend, three are in an Uptrend Under Pressure, and four are in a Rally Attempt.
  • Today we shifted Hong Kong to an Uptrend Under Pressure from a Confirmed Uptrend. Yesterday we shifted India to a Rally Attempt from a Downtrend.
  • We remain bullish on India’s growth stocks following the corporate tax rate reduction.
  • Refer to page 3 for our view on the tax impact by sector.
  • Refer to page 8 for more Indian growth ideas with high EPS growth and ROE. See Base Status column for our take.
  • Highlighted ideas: Focus List Kotak Mahindra Bank (KOK.IN) and removal of Tata Consultancy Services (TSE.IN). Refer to pages 5 and 7 for annotated charts.
  • Refer to page 9 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.

 

  • Out of 13 APAC markets, seven are in a Confirmed Uptrend, two are in an Uptrend Under Pressure, and four remain in a Rally Attempt.
  • South Korea was moved to a Confirmed Uptrend from a Rally Attempt on August 30. The KOSPI has gained 5.2% since the follow-through day and it has reclaimed its 50- and 100-DMA. It is trading 1.5% below its 200-DMA. Historically, it has faced consistent resistance along its 200-DMA. We recommend staying patient and selective until the market reclaims its 200-DMA on higher volume.
  • Refer to page 7 for a detailed Datagraph of the KOSPI and page 8 for a comparison graph of the KOSPI, the S&P 500, and the Nikkei.
  • In South Korea, value stocks are leading over the last four weeks, similar to Japan.
  • Strength has yet to broaden in South Korea as only 34% of liquid stocks are trading above their 50- and 200-DMA. In the last four weeks, Health Care stocks have gained significantly, while Technology stocks have lagged.
  • Refer to page 9 for stocks near pivot in South Korea.
  • Refer to page 10 for actionable Focus List ideas.
  • Refer to pages 5–6 for recent addition Interglobe Aviation (VGA.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.

 

  • Of 13 APAC markets, four are in a Confirmed Uptrend, four are in an Uptrend Under Pressure, and five are in a Rally Attempt.
  • We upgraded Hong Kong and New Zealand to a Confirmed Uptrend today and South Korea last Friday.
  • Consumer Staple, Health Care, and Utility are holding up well in Hong Kong. Refer to page 9 for ideas with sound fundamentals from these sectors. Refer to pages 6 and 7 for annotated charts of the Hang Seng and Sector Rotation for Hong Kong, respectively.
  • Highlighted Focus List idea: Nagacorp (NAGA.HK). Refer to page 5 for an annotated chart.
  • India remains in a Rally Attempt and is trading below the 200-DMA amid macroeconomic weakness owing to poor Q1 FY20 GDP growth. Refer to page 8 for an annotated chart of the Sensex. Refer to page 10 for Negative Alert ideas in India.
  • 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.

 

  • The MSCI Asia ex Japan is consolidating sideways and waiting for a trend change.
  • Market conditions remain unchanged with only China in a Confirmed Uptrend.
  • China is holding up well compared to other major developed and emerging markets, led by Consumer Staple and Technology.
  • Refer to pages 3 and 4 for a Comparison Graph of major markets year-to-date and since May, respectively.
  • China Staples are up 104% year-to-date with P/E expansion of +9.7 over the last two quarters. P/E expanded the most for China Basic Materials (+31) in the same period, up 42% year-to-date.
  • Refer to page 8 for notable themes showing strength in APAC.
  • Highlighted Focus List ideas: Treasury Wine Estates (

    ) and Zhongsheng (ZSG.HK). Refer to pages 10 and 12 for annotated charts.

  • Refer to page 13 for extended ideas to trim (a majority are China A shares).