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) is consolidating below its 100-DMA resistance. We recommend a selective approach. Focus on stocks that are holding above key moving averages 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. Five markets, including India and South Korea, are in a Rally Attempt.
  • India’s Sensex 30 found support near its 200-DMA and retook its short-term moving averages. Look for a follow-through day to turn constructive. Recent Maharashtra state election results and rebalancing of the MSCI EM Index are some of the recent tailwinds.
  • Alternatively, living below its 50-DMA or a break below the 200-DMA would make the Sensex vulnerable to further downside. Corporate earnings growth has decelerated in recent quarters and Foreign Institutional Investors continued to be net sellers in November.
  • Leaders in India have held up relatively well which is positive and encouraging. Technology and Health Care are in the top-right quadrant of sector rotation, while Financial is improving. Refer to page 9 for a list of watchlist ideas in India.
  • Highlighted Focus List Idea: PB Fintech (PB2.IN; POLICYBZ 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 for the first time since mid-September. We recommend a selective approach. Look for markets to settle near logical support levels and avoid further clustering of distribution days. Focus on stocks that are holding above key moving averages with rising relative strength.
  • Singapore is in a Confirmed Uptrend. Seven markets, including China, Hong Kong and Japan, are in an Uptrend Under Pressure. Three markets, including South Korea, are in a Rally Attempt. India and Indonesia are in a Downtrend.
  • In the APAC sector rotation chart, Capital Equipment entered the top right quadrant (outperforming and improving) in early-November, alongside Technology. Nvidia’s results, due after the market close today, will be a key catalyst for AI-related Capital Equipment stocks. Refer to page 9 for a watchlist of Capital Equipment stocks that are constructive leaders.
  • Emerging markets performance and U.S. Dollar performance tend to be negatively correlated. Currently the U.S. Dollar is strengthening, which coincides with the pullback in EEMA. Markets anticipate that Donald Trump will impose higher tariffs on imports to encourage production in the U.S. This is expected to result in a higher inflationary environment, which has been anticipated by a rise in yields and U.S. dollar appreciation.
  • Singapore, followed by Thailand, are clear outliers in the Southeast Asian region. Indonesia, Malaysia and the Philippines were downgraded in the last two weeks. Singapore is at multi-year highs following reform announcements in equity markets, while Thailand, driven by stimulus measures, is consolidating near recent highs. Refer to page 13 for a list of constructive leaders in Southeast Asian markets.

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 50-DMA support for the first time since mid-September. We recommend a selective approach. Look for markets to settle near logical support levels and avoid further clustering of distribution days.
  • Three markets, including China and Taiwan, are in a Confirmed Uptrend. Six markets, including Hong Kong and Japan, are in an Uptrend Under Pressure. Three markets, including India and South Korea, are in a Downtrend. Indonesia is in a Rally Attempt.
  • Hong Kong was shifted to an Uptrend Under Pressure after it undercut October lows. China’s CSI 300 is holding up relatively better above its 21-DMA. China announced additional stimulus measures to address local government debt issues. There were no stimulus measures aimed at consumers, disappointing the market.
  • Technology is in the top-right quadrant of the APAC sector rotation chart, and stands out as a sector in Hong Kong and China. We also notice pockets of strength in India, Japan and Taiwan within Technology. Focus on leading Technology groups in specific markets.
  • Within Technology, Elec-Misc Products, Electronic Parts and Computer-Tech Services are some of the leading industry groups across APAC. Refer to page 16 for a list of Technology ideas across APAC that are trading near entry points.
  • Highlighted Focus List Idea: Lotes (LTS.TW; 3533 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) bounced off its 50-DMA support ($76; -2%) and reclaimed its 21-DMA. Chinese markets have found support along their 21-DMAs. Other major markets continue to trade below multiple resistance levels. Maintain a selective approach and focus on stocks breaking out or those forming the right side of bases, with rising relative strength.
  • Three markets, including China and Hong Kong, are in a Confirmed Uptrend. Nine markets, including Japan and South Korea, are in an Uptrend Under Pressure. India is in a Downtrend.
  • We shifted India back to a Downtrend from a Rally Attempt after the Sensex undercut its October 25 low. The index has traded below the 100-DMA only twice since April 2023, and must quickly retake its 100-DMA resistance. Living below the 100-DMA or breaking the 200-DMA support would imply further downside risk. Currently, there are 17 Indian stocks on the Focus List. This is the lowest level since March 2023. Over the last month, our Focus List weighting has shifted to China from India.
  • Hong Kong’s Hang Seng index is consolidating around its 21-DMA since pulling back from its October highs. The index has remained constructive after holding the 21-DMA. Overall breath is strong, with 72% of stocks trading above their key moving averages. The outcome of China‘s NPC Standing Committee meeting on Friday could act as a near-term catalyst for the market.
  • Highlighted Focus List Idea: Giant Biogene (GIBH.HK; 2367 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) is consolidating below its 21-DMA resistance. Chinese markets are pulling back to their 21-DMAs. Continue a selective approach in markets where indices are struggling near their 50- or 200-DMAs. Focus on stocks breaking out or those forming the right side of bases with rising relative strength.
  • Five markets, including China, Hong Kong and Taiwan, are in a Confirmed Uptrend. Seven markets, including Japan and South Korea, are in an Uptrend Under Pressure. India was shifted to a Rally Attempt from a Downtrend.
  • Japanese indices have been range bound near key moving averages. Japan’s ruling Liberal Democratic Party (LDP) failed to retain a majority in lower house elections. This could deter the BOJ from raising interest rates in the near term. The Technology, Retail and Health Care sectors are leading in Japan based on median RS Rating.
  • India’s Sensex continues to trade below its 100-DMA. Health Care and Technology are notable sectors that are outperforming.
  • Hong Kong’s Hang Seng remains constructive near its rising 21-DMA. Focus on stocks with rising Relative Strength that have not pulled back significantly from recent highs. Refer to page 9 for a list of leaders in Hong Kong that are the most constructive.
  • Highlighted Focus List Idea: Trip.com (TRCG.HK; 9961 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) pulled back from a multi-year high and is consolidating near its 21-DMA support. Continue a selective approach in markets where indices are struggling near 50- or 200-DMAs. Focus on stocks breaking out or those forming the right side of bases, with rising relative strength.
  • Seven markets, including Hong Kong and China, are in a Confirmed Uptrend. Five markets, including Japan and South Korea, are in an Uptrend Under Pressure. India is in a Downtrend.
  • We downgraded India to a Downtrend from an Uptrend Under Pressure. The Sensex, and key small- and mid-cap indices, breached 100-DMA support for the first time since June. We need to see a quick retake of the 100-DMA of these indices, or we will turn more cautious on India.
  • Lower than expected Q2 results so far for the majority of the stocks, and foreign institutional investors (FII) selling, have led to a pullback in India. FIIs have sold ~$10B so far in October, which is higher than the $7.9B sold during the Covid pandemic in March 2020.
  • Near-term breadth in India, measured by the percentage of stocks trading above their 50-DMA, has declined sharply over the last four weeks across all market cap categories. By sector, Health Care outperformed based on the median 3-month RS Rating, and is holding up well. Refer to page 10 for a list of stocks in India that are holding above key support levels and remain constructive.
  • Highlighted Focus List Idea: Giant Biogene (GIBH.HK; 2367 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) pulled back from a multi-year high and breached its 21-DMA support. Look for Chinese markets to consolidate above short-term moving averages as pullbacks occur. Focus on stocks breaking out or those forming the right side of bases, with rising relative strength.
  • Eight markets, including Japan, Hong Kong and China, are in a Confirmed Uptrend. Five markets, including India and South Korea, are in an Uptrend Under Pressure.
  • We have prepared a presentation on current topics, themes and market trends. This includes improving breath in the APAC region, China stimulus history, Japan post-carry trade recovery, India under pressure, Korea Healthcare leadership, Taiwan Tech and Southeast Asia resurgence. For more detail, see our APAC Overview Presentation here.
  • Highlighted Focus List ideas: TSMC (TSM.TW), Advantest (AB@N.JP), ABB India (AB.IN), Hanwha Aerospace (SGA.KR), Trip.com (TRCG.HK) and Sino Biopharm (SBIO.HK). Refer to pages 7-12 for annotated charts.

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 gain above July highs, before pulling back in the last session. Continue a selective approach in markets where indices are struggling near 50- or 200-DMAs. Focus on stocks breaking out or those forming the right side of bases, with rising relative strength.
  • Eight markets, including Japan, Hong Kong and China, are in a Confirmed Uptrend. Five markets, including India and South Korea, are in an Uptrend Under Pressure. India was shifted to an Uptrend Under Pressure from a Confirmed Uptrend.
  • China and Hong Kong indices are pulling back from 52-week highs, after the stimulus announcement on October 8 disappointed investors. A near-term consolidation above short-term moving averages is considered healthy for the indices. The current stimulus package is at the lower end when compared with previous interventions.
  • Based on historical analysis, Hong Kong and China indices may not move in a similar trend post the stimulus announcement – the drawdown duration for Chinese indices tends to be shorter than for Hong Kong indices.
  • Health Care, Consumer Cyclical and Financial have outperformed in Hong Kong since the stimulus announcement. Retail underperformed other sectors during the pullback. Capital Equipment and Consumer Cyclical have outperformed in line with prior stimulus cycles, while Utility and Consumer Staple have underperformed. Refer to page 10 for a list of stocks in Hong Kong that remain constructive despite a pullback.
  • Highlighted Focus List Idea: Pop Mart (PMIG.HK; 9992 HK). Refer to page 7 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) broke above July highs and is trading at a multi-year high. Chinese markets have gained momentum and are trading near new 52-week highs. Avoid chasing extended ideas. Other major markets, including Japan, are near key moving averages. Continue to adopt a selective approach in markets where indices are struggling near their 50- or 200-DMAs.
  • Ten markets, including China, Hong Kong and Japan, are in a Confirmed Uptrend. Three markets are in an Uptrend Under Pressure.
  • Recently, the Hang Seng has risen sharply in a short span of time following the stimulus announcement by China. We looked at periods of economic stimulus cycles in China since 2008. In previous cycles, the Hang Seng rose 10-50% over a period of eight to 11 months. Refer to page 11 for a monthly annotated chart of the Hang Seng Index highlighting the economic stimulus cycles.
  • Select large cap stocks have been consistent outperformers in the previous economic stimulus cycles. Notable Focus List stocks include BYD (BYD.HK; 1211 HK) and Tencent (TCNT.HK; 700 HK). Look for these stocks to pull back or trade in a sideways range near short-term moving averages, before initiating or adding to positions.
  • Breadth in Hong Kong as improved significantly, and weekly breakouts have jumped to a 10-year high. Consumption-related sectors such as Consumer Staple, Consumer Cyclical and Retail, along with Health Care, have outperformed over the past week. Refer to pages 13 and 14 for a list of stocks in Hong Kong that could be beneficiaries of the economic stimulus.
  • Highlighted Focus List Idea: Trip.com (TRCG.HK; 9961 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 gain above its 50- and 100-DMAs and made a new 52-week high. We recommend increasing risk in markets that are trading above key moving averages, and a gradual and selective approach in markets that are yet to retake key moving averages. Focus on stocks that are breaking out or forming the right side of bases, with rising relative strength.
  • Twelve of the thirteen APAC markets are in a Confirmed Uptrend. New Zealand is in an Uptrend Under Pressure. China and Japan were upgraded to a Confirmed Uptrend. Hong Kong and Taiwan were shifted back to a Confirmed Uptrend.
  • The interest rate cut by the U.S. Fed is likely to start an easing cycle in APAC markets. Except for Japan, which is expected to raise interest rates in coming months, other major APAC markets have reduced / kept interest rates steady. China, South Korea and India are expected to cut rates at least once in 2024.
  • Hong Kong turned more constructive following the economic stimulus announcements by China. Approximately 57% of liquid Hong Kong stocks gained more than 10% last week, and one in four large cap stocks made a 52-week high. Refer to pages 14 and 15 for a watchlist of Hong Kong stocks that are constructive with rising relative strength.
  • Southeast Asian markets became extended in the short-term and could consolidate in the near term. Refer to page 10 for a watchlist of Southeast Asian stocks.
  • Japan, South Korea and Taiwan are 7-11% off highs and face multiple levels of resistance. We will turn more constructive as these markets clear these resistance levels.
  • Highlighted Focus List Idea: Tencent Holdings (TCNT.HK; 700 HK)