Several APAC markets are in a Rally Attempt and could have a follow-through day in the coming sessions, warranting an update to a Confirmed Uptrend. For now, our investment approach remains cautious, however, we continue to notice pockets of strength in APAC. In this week’s webinar, Director, Research Analyst Derek Higa will highlight APAC market conditions and sector rotation. He’ll be joined by other William O’Neil + Co. analysts to examine the themes and ideas they think warrant your attention.
Author: Derek Higa
APAC Weekly Summary
Key takeaways include:
Majority of APAC markets Under Pressure or in a Rally Attempt
Recommend a patient approach, being selective to areas of strength
Use follow-through days to begin gradual approach to allocating capital
India is a preferred market
MSCI Asia ex. Japan (
) testing resistance along 200-DMA
APAC Market Conditions, Breakouts, and Focus List Count
Historical study about the significance of the 200-DMA for Hong Kong, Japan, and India
Highlight key sector trends in Hong Kong, Japan, and India
Focus List themes highlighted in the report:
Hot Pot Cuisine: Yihai International (YIHA.HK; 1579:HK)
WAAAX Stocks: Wisetech Global (WTC.AU; WTC:AU), Xero (XRO.AU; XRO:AU)
SE Asia Rotation: Mungthai Capital (MUTH.TH; MTC:TB)
Other high conviction Focus List ideas
Lagging stocks with Negative Alerts
APAC Market Update, Themes, and Ideas
Key takeaways from this report:
Majority of APAC markets Under Pressure or in a Rally Attempt
Recommend a patient approach, being selective to areas of strength
Use follow-through days to begin gradual approach to allocating capital
India is a preferred market
MSCI Asia ex. Japan (
) testing resistance along 200-DMA
APAC Market Conditions, Breakouts, and Focus List Count
Historical study about the significance of the 200-DMA for Hong Kong, Japan, and India
Highlight key sector trends in Hong Kong, Japan, and India
Focus List themes highlighted in the report:
Hot Pot Cuisine: Yihai International (YIHA.HK, 1579:HK)
WAAAX Stocks: Wisetech Global (WTC.AU, WTC:AU), Xero (XRO.AU, XRO:AU) ‘
SE Asia Rotation: Mungthai Capital (MUTH.TH, MTC:TB)
Other high conviction Focus List ideas
Lagging stocks with Negative Alerts
APAC Weekly Summary
Key points from this week’s report:
We downgraded Japan to a Downtrend last Friday. See our note here.
Given the escalation of the trade war, investment opportunities in South Asian markets could become more appealing due in part to supply chain relocation.
Thus far in 2019, the Philippines has been outperforming among Southeast Asian markets. Find our comparison chart on page 3 and Datagraph for the PSE Composite on page 4.
Highlighted Focus List ideas: Muangthai Capital ( MUTH.TH ) and SM Prime Holdings ( SMP.PH ). Annotated Datagraphs on page 7 and 8.
Find our actionable ideas list on page 10.
APAC Market Update
Key points:
We are downgrading Japan to a Downtrend as the Nikkei 225 has failed to hold above the 200-DMA. It is now trading below the May 14 low when it had an intraday upside reversal. We view next support near ~20,300 followed by December lows of ~18,900.
We have turned more cautious on the Japanese market and recommend raising cash if possible or keeping a defensive approach.
Out of our five Japanese Focus List ideas, Asahi Intecc ( AS@H.JP; 7747:JP ), Fast Retail ( RETA.JP; 9983:JP ), SG Holdings ( SGHS.JP; 9143:JP ), and Peptidream ( PETI.JP; 4587:JP ) are the most under pressure. Recruit Holdings ( RHCL.JP; 6098:JP ) is the only idea holding more than 5% above its 50-DMA.
See attached report for ideas with low beta and Relative Strength near highs.
Info Edge breaking out to all-time highs, Actionable
Key points from the report:
Shares broke out of a five-week flat base on above average volume and are currently actionable.
On May 28, the stock declined around 1.5% intraday and later recovered after announcing its FY19 results to close up 2.7%. It has gained ~11% in the past three days.
Stellar fundamental ratings: Composite Rating 98, SMR Rating A, EPS Rank 68.
Solid technical ratings: RS Rating 94, A/D Rating A.
The number of funds holding the stock increased to 186 as of March 2019 from 116 as of March 2018.
APAC Weekly Summary
Key points from this week’s report:
Both Hong Kong and Taiwan were downgraded to a Downtrend last week as the indices failed to hold above respective 200-DMA support.
In Hong Kong, the sectors with the most stocks holding above their 200-DMA are Financial, Consumer Staple, and Utility.
Average A/D Rating of Hong Kong Consumer Staple, Retail, and Health Care remain positive, indicating accumulation in these sectors.
We shifted India back to a Confirmed Uptrend. This is following election results and the Sensex closing at all-time highs.
Indian Financials have gained 15% year-to-date, outperforming the broad market gain of 10.2%.
Highlighted Focus List Ideas: HDFC (HDF.IN; HDFC: IN); RBL Bank (RB2.IN; RBK: IN). Refer to annotated Datagraphs™ on page 10–11.
See our actionable Focus List ideas on page 12.
APAC Weekly Summary
Key points from this week’s report:
Overall, we continue to recommend a cautious approach as the number of distribution days remains elevated across APAC markets. We recommend limiting buys to stocks with RS near highs.
Following Australia’s elections, Retail, Financial, and large-cap stocks are leading. In India, small-cap stocks are leading as the market awaits election results. For Australian and Indian ideas near pivot, see our lists on pages 3 and 7.
Highlighted Australian Focus List ideas: Xero (
) and A2 Milk (
). Refer to annotated charts on pages 8 and 9.
See actionable Focus List ideas on page 11.
APAC Weekly Summary
Key points from this week’s report:
The majority of APAC markets remain in an Uptrend Under Pressure and the number of distribution days remains elevated (median of 4.5 among all APAC markets).
We remain cautious as markets remain volatile. We highlight resilient Focus List ideas on page 3 and low-beta stocks on page 8.
The Consumer Staple sector (WS005.R3) is outperforming other sectors. Stocks in this sector that are near the pivot range are listed on page 4.
Highlighted Consumer Staple Focus List idea: Tsingtao Brewery ‘H’ ( TSIN.HK ).
See actionable Focus List ideas on page 9.
APAC Weekly Summary
Key points from this week’s report:
We shifted China, Hong Kong, Japan, and India to an Uptrend Under Pressure this week and have become more cautious overall. The number of distribution days is rising (median of four among all APAC markets).
We recommend a more cautious approach. Continue to trim extended ideas and look to reduce those trading below support levels.
This week, we focus on India’s market. We are looking for the Sensex to consolidate near highs to remain constructive.
Indian large caps continue to be among the most constructive in APAC. In particular, Financial and Technology large caps have outperformed in India.
Highlighted Focus List ideas: Kotak Mahindra ( KOK.IN; KMB:IN ) and Tata Consultancy ( TSE.IN; TCS:IN).
See our list of actionable ideas on page 11.