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.

 

  • 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).

 

Media and Internet

Posted on by Derek Higa

Key points:

  • Thoughts on XLC
  • Old Media versus New Media IG Ranks
  • Theme Updates
    • Cord Cutting and Connected TV: ROKU, TTD
    • OTT Completive Landscape: DIS, NFLX
    • Social Media Regulation: FB, TWTR
    • Education-as-a-Service: CHGG, EDU, TAL, GSX, Koolearn Tech, ARCE
    • Online Food Delivery: Just Eat, Takeaway.com, Delivery Hero, GRUB
  • Focus List Ideas
    • DIS
    • TWTR
    • CHGG
    • Other Focus List Ideas (not in presentation)
    • MTCH
    • InfoEdge (India)
    • Stroeer (Germany)
    • VGI (Thailand)
  • Watch List Ideas
    • TTD
    • ROKU
    • EDU
    • TAL
    • GSX
    • Koolearn Tech (Hong Kong)
    • Just Eat Takeaway.com (U.K.)
    • Delivery Hero (Germany)
  • FB, NFLX, GRUB Weak

APAC Weekly Summary

Posted on by Derek Higa

Key points

  • MSCI Asia Ex Japan continues to be in consolidation awaiting a trend change.
  • One (China) out of 13 markets are in a Confirmed Uptrend, five are in an Uptrend Under Pressure, and seven are in a Rally Attempt.
  • The number of APAC stocks trading above their 50- and 200-DMA has increased in the past week after declining since the start of August.
  • The Health Care sector is gaining strength in Hong Kong. Refer to pages 3 and 4 for sector heat map and Rotation Graph.
  • We are highlighting two recent additions to our Focus List: JCR Pharmaceuticals (JCRE.JP) and Wuxi Apptec (WUXA.HK). Refer to pages 7 and 9 for annotated charts.
  • For fundamentally sound ideas with RS near highs and defensive ideas in APAC refer to pages 10 and 11, respectively.
  • Refer to page 12 for Actionable Focus List ideas.

APAC Market Update

Posted on by Derek Higa

Yesterday we upgraded Mainland China to Confirmed Uptrend after a day 10 follow-through. On Monday, August 19 the CSI 300 rose more than 2% on greater volume after the Chinese government announced interest rate reforms. We see the index’s next resistance near July highs of 3,900-3,950 and would like it to hold above the 50-DMA (~3,700) in the near term to boost our conviction.

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 near month lows. During the week, China, India, Japan, and South Korea were moved to a Rally Attempt from a Downtrend, but our conviction is low.
  • Hong Kong remains in a Downtrend and trading near January lows. Relative strength of all sectors, except for Utilities and Technology (surprisingly), has declined. Bellwether stock Tencent Holdings (TCNT.HK) remains under pressure. Refer to page 7 for a detailed annotated chart.
  • China A shares are holding above the 200-DMA, but we recommend waiting for a follow-through day before becoming more constructive on the market.
  • Health Care, Retail, and Technology remain resilient in APAC despite weakness in the broader market.
  • Highlighted Focus List idea: Haidilao Holdings (HAIN.HK). Refer to page 6 for an annotated chart.
  • Refer to page 8 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 trading near 52-week lows with support at January lows of $61. If this fails, the next level of support is unclear.
  • Of 13 APAC markets, one is in a Confirmed Uptrend, six are in an Uptrend Under Pressure, and six are in a Downtrend. Our market conditions have turned more bearish since last Wednesday.
  • Re-escalation of the U.S.-China trade dispute has led to a clustering of distribution days in the past five sessions. We have downgraded Hong Kong, South Korea, India, Japan, China, and Malaysia to a Downtrend in the last four sessions.
  • Technology and Financial sectors are holding up relatively better despite weak market conditions, with 56% and 47% of liquid APAC stocks (ex. China) trading above the 200-DMA, respectively.
  • Highlighted Focus List ideas: Pidilite Industries ( PID.IN ) and Accton Technology ( ACC.TW ). Refer to pages 6 and 8 for annotated charts.
  • Refer to page 9 for ideas with low beta, three-month RS Rating >80, and near pivot.
  • Refer to page 10 for Actionable Focus List ideas.

APAC Market Update

Posted on by Derek Higa

Key points:

  • We are downgrading China to a Downtrend as the CSI 300 fell below the 50-DMA on Friday and key support of ~3,675 today.
  • The selloff has intensified amid escalating trade tensions between the U.S. and China.
  • Among our China Focus List ideas, Avic Jonhon Optronic Tech ( CAO.CN ), Zhejiang Dingli ( ZDM.CN ), Shennan Circuits ( LZV.CN ), Wuliangye ( YWU.CN ), Topchoice Medical ( ZTI.CN ), and Guangdong Haid Group ( GHG.CN ) are holding up well and trading above their 50-DMA.