Key points:
• The MSCI Asia Ex Japan index (AAXJ) retook its 21- and 50-DMAs and is attempting to breakout to year-to-date highs. Market
sentiment has improved and we are encouraged by the price action in major markets. We recommend a gradual approach to
increasing risk as markets follow-through or break above key moving averages or resistance levels.
• Seven markets, including China, Japan, Hong Kong and Taiwan, are in a Confirmed Uptrend. Three markets, including India, are in
an Uptrend Under Pressure. South Korea and Thailand are in a Rally Attempt. Indonesia is in a Downtrend.
• The Hang Seng retook its 200-DMA for the first time since August 2023. Going forward, look for the index to hold above its 200-
DMA if tested to remain constructive. Foreign funds have been net buyers of Chinese stocks for three consecutive months since
February.
• Breadth is improving across Hong Kong. The Median RS Rating and Accumulation/Distribution Rating have improved over the past
13 weeks across Hong Kong stocks, particularly large caps. Refer to page 10for minicharts of large caps in Hong Kong to overweight.
• We notice strength broadening across sectors in Hong Kong. Over the past four weeks, Transportation, Financial, Consumer Staple,
Health Care, Consumer Cyclical and Technology have seen significant improvement in median RS Rating. Refer to pages 11 and 12
for a list of leaders in Hong Kong.
• Highlighted Focus List Idea: Tencent (TCNT.HK; 700 HK).
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
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 200-DMA support and retook its 100-DMA. The index is testing resistance at its 50-DMA. We recommend a patient approach. Markets are bouncing off recent lows. Look for indices to retake key moving averages or follow through to turn constructive. Focus on constructive ideas with rising relative strength.
- China, Malaysia and Singapore are in a Confirmed Uptrend. Four markets, including India and Hong Kong, are in an Uptrend Under Pressure. Five markets, including Japan and South Korea, are in a Rally Attempt. Taiwan is in a Downtrend.
- Over the last four weeks, leaders (with an RS Rating >70) from all sectors except Technology had positive returns. Within Technology, semiconductor-related industry groups are pulling back sharply. Thus far, leadership holding above key moving averages during market volatility is a sign of strength in the underlying longer-term bull run.
- We see strength broadening into weaker sectors in APAC. In addition to Capital Equipment which continues to improve and outperform, we are noticing early signs of improvement in Retail and Consumer Cyclical. Refer to pages 9 and 10 for stocks of interest from the Consumer Cyclical and Retail sectors.
- Highlighted Focus List Idea: Pop Mart (PMIG.HK; 9992 HK).
APAC Weekly Summary
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 21- and 50-DMA support for the first time since February. Most APAC markets are under pressure. Clustering of distribution days along with weakening price action are cautionary signals. Markets must now retake or consolidate above logical support levels to turn constructive. If possible, raise cash and adopt a patient approach. Focus on constructive ideas with rising short-term relative strength.
- China is in a Confirmed Uptrend. Nine markets, including Hong Kong, Taiwan and India, are in an Uptrend Under Pressure. Japan, South Korea and the Philippines are in a Downtrend. Today, we downgraded Japan and South Korea to a Downtrend.
- Leading stocks with RS ratings above 70 are holding up well despite a pullback, with 70% still above their 50-DMA. Leading stocks should hold above key support levels if tested during a constructive pullback.
- Across APAC, Capital Equipment is moving to the top-right quadrant of the sector rotation chart, suggesting relative outperformance and improvement over the last four weeks. This is prevalent in Japan, Hong Kong, and India. Refer to pages 17-18 for a list of leading stocks from the Capital Equipment sector.
- Highlighted Focus List Idea: ABB India (AB.IN; ABB IN).
APAC Weekly Summary
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 March highs and remains constructive above its rising 21-DMA. Most markets continue to hold above logical support levels. Continue to focus on high- or rising-relative strength ideas which are displaying constructive price action.
- Seven markets, including India, South Korea, Taiwan and Hong Kong, are in a Confirmed Uptrend. Five markets, including Japan, are in an Uptrend Under Pressure. China is in a Rally Attempt.
- We shifted Japan to an Uptrend Under Pressure from a Confirmed Uptrend after the Nikkei failed to hold above its 21-DMA. It is still trading 15% above its 40-WMA. A constructive consolidation, as the long-term moving averages catch up, is considered healthy. The spread between MSCI Value and Growth has slightly increased since late March.
- Capital Equipment, Basic Material and Retail are moving into the top-right quadrant of the sector rotation chart for Japan. We are also seeing slight improvement in Consumer Cyclical and Financial. Technology, which was an outperformer, has pulled back over the past four weeks. Refer to page 10 for a list of stocks of interest in Japan.
- Highlighted Focus List Idea: Coca-Cola Bottlers Japan (KITK.JP; 2579 JP).
APAC Weekly Summary
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 trading constructively above its rising 21-DMA and is approaching August 2023 highs. Most markets continue to trade constructively, with several indices making little or no price progress in recent weeks. Continue to focus on high- or rising-relative strength ideas which are displaying constructive price action. Trim extended ideas.
- Seven markets, including Japan, South Korea, Taiwan and Hong Kong, are in a Confirmed Uptrend. Four markets, including India, are in an Uptrend Under Pressure. China and Thailand are in a Rally Attempt.
- SMID stocks in India have bounced from their recent lows. Large caps continue to outperform with strength seen across all sectors, except Technology and Consumer Staple. Within SMID stocks, there is strength in the Capital Equipment, Energy and Utility sectors. Refer to page 12 for stocks of interest in India.
- Hong Kong is consolidating above its 50- and 100-DMAs. Look for the index to retake its 200-DMA for a sustainable rally. The Basic Material, Energy and Utility sectors are still outperforming. However, increasing momentum and broadening in other sectors is notable. Underperforming sectors such as Retail and Health Care have also improved. Broadening strength and more sector participation is needed for a sustainable rally. Refer to page 14 for a list of leaders in Hong Kong.
- Highlighted Focus List Ideas: Data Patterns (DP1.IN; DATAPATT IN) and Weichai Power (WEIC.HK; 2338 HK).
APAC Weekly Summary
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 its recent highs and is testing its rising 21-DMA support. Continue to focus on high- or rising-relative strength ideas which are displaying constructive price action. Trim extended ideas. Reduce ideas that are trading below key moving averages or support.
- Eight markets, including Japan, South Korea, Taiwan and Hong Kong, are in a Confirmed Uptrend. Three markets, including India are in an Uptrend Under Pressure. China and Thailand are in a Rally Attempt.
- Among the Developed APAC markets, Australia is less extended from its 200-DMA and trades at its 52-week high. Australia’s ASX All Ordinaries index cleared its 2021 highs and remains constructive.
- The Technology, Retail and Financial sectors have improved over the last four weeks, while Energy and Basic Material have moved out of favor as iron ore and coal prices have declined from recent highs. However, we see pockets of strength within certain precious metals groups such as gold. Refer to page 10 for minicharts of constructive large cap EWA constituents and page 11 for stocks near pivot in Australia.
- Highlighted Focus List Idea: Xero (XRO.AU; XRO AU). Refer to page 7 for an annotated chart.
APAC Weekly Summary
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 trending above all key moving averages and is 3% below its 52-week high. We continue to look for rotation in extended markets such as Japan and Taiwan. Chinese markets are turning more constructive. Continue to focus on high- or rising-relative strength ideas which are displaying constructive price action. Consider trimming extended ideas.
- Nine markets, including Japan, India, Taiwan and Hong Kong, are in a Confirmed Uptrend. New Zealand and Singapore are in an Uptrend Under Pressure. China and Thailand are in a Rally Attempt.
- India’s introduction of regulatory requirements to stress test small and mid-cap mutual funds has led to a significant correction in SMID stocks. We expect the results of stress tests to be released on March 15 and to be important to the direction of small and mid-cap indices in the midterm.
- While SMID stocks have breached key support levels, the Sensex and Nifty 50 continue to hold their respective moving averages. Furthermore, large cap is outperforming relatively. We will turn more cautious on India, should the Sensex and Nifty 50 break below their 50-DMAs. A rise in distribution days or clustering would also be a negative signal in our view.
- In recent years, large-cap stocks have had lower RS Ratings than SMID stocks due to the significant outperformance of illiquid small-cap stocks. However, more recently, over the last eight weeks, large caps have seen a significant improvement in RS Ratings. Refer to page 11 for a list of leading large caps with rising relative strength.
- Highlighted Focus List Idea: ICICI Bank (ICG.IN; ICICIBC IN).
APAC Weekly Summary
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 above all key moving averages with immediate support along the rising 21-DMA. We continue to look for rotation or broadening to occur for markets to remain constructive. Continue to focus on high or rising relative strength ideas which are displaying constructive price action. Consider trimming extended ideas.
- Eight markets, including Japan, India, Taiwan and Hong Kong, are in a Confirmed Uptrend. Three markets are in an Uptrend Under Pressure. China is in a Rally Attempt and Thailand is in a Downtrend.
- Breadth remains healthy across APAC ex China. If the market consolidates in the near term, we prefer to see strength broaden across sectors and a rise in the number of stocks forming bases. Also, look for leaders to hold above key moving averages should they pullback.
- Leading markets such as Japan and Taiwan continue to rise and are slightly extended in the near term. China and Hong Kong should hold above their 50-DMAs and eventually rise above key resistance levels to turn more constructive. Indian small caps are pulling back from highs and are due for consolidation. South Korea is at an early-stage setup, attempting to break out to new highs. We view the market as the most attractive from a risk/reward perspective. Refer to page 11 for a list of constructive setups in APAC outside Technology.
- Highlighted Focus List Idea: Havells India (HVI.IN; HAVL IN).
APAC Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- The MSCI Asia Ex Japan index (AAXJ) has continued to rise above its 200-DMA and remains in consolidation since early 2023. Major APAC markets are constructive and have gained significantly over the last few months. However, they are extended in the short term. Continue to focus on ideas with rising relative strength and constructive price action. Avoid ideas which fail to hold above or are living below prior support levels.
- Seven markets, including Japan, Australia, South Korea, Hong Kong and Taiwan, are in a Confirmed Uptrend. India, New Zealand, Indonesia and Singapore are in an Uptrend Under Pressure. China and Thailand are in a Rally Attempt.
- Hong Kong has trended upward since its last follow-through day. China is trending similarly. We believe a strong break above their 100-DMAs further increases the probability of Chinese markets bottoming in the short term. The Hang Seng should then quickly rally to its 200-DMA (17,750), which has been a significant resistance level since January 2023.
- Breadth in Hong Kong has improved with large-caps seeing the most improvement over the last four weeks. Both leaders and laggards have improved based on RS Rating over the same period.
- Furthermore, there are subtle signs of rotation out of defensive areas. Momentum is widening across sectors in Hong Kong. Consumer Cyclical and Capital Equipment have seen the most improvement in stocks trading above their 200-DMAs, while Utility has lagged. Refer to page 15 for stocks of interest in Hong Kong. • Highlighted Focus List Idea: Asahi Intecc (AS@H.JP; 7747 JP).
APAC Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- The MSCI Asia Ex Japan index (AAXJ) has reclaimed its 200-DMA after bouncing off its 100-DMA and remains in consolidation since early 2023. Major APAC markets are constructive and have gained significantly over the last few months. A few are extended in the short term. Continue to focus on ideas with rising relative strength and constructive price action. Avoid ideas which fail to hold above or are living below prior support levels.
- Seven markets, including Japan, Australia, South Korea, Hong Kong and Taiwan, are in a Confirmed Uptrend. India, New Zealand, Indonesia and Singapore are in an Uptrend Under Pressure. China and Thailand are in a Rally Attempt.
- Technology is one of the three sectors trading more than 8% above the 200-DMA on a median basis across APAC. Technology is extended in the short term in Japan, Taiwan and South Korea. The sector’s extended nature is primarily being driven by ideas from the semiconductor and hardware Industry Groups. Semiconductor-related groups have outperformed other Technology groups over the last four weeks.
- Based on median RS Rating, across APAC ex China, the Technology sector has weakened the most over the past four weeks. Given the extended nature of Technology, it is logical and healthy to see a pullback, and we could see rotation into other sectors. Refer to page 8 for setups that are turning constructive in Energy, Capital Equipment, Financial, Health Care, Transportation and Basic Material.
- Highlighted Focus List Idea: Takeuchi Manufacturing (TMCL.JP; 6432 JP)
