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 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

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 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

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 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

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 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

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) 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)

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) has failed to hold above its 200-DMA after briefly trading above it. The index is testing support at the 100-DMA and has remained in consolidation since early 2023. Major APAC markets are constructive and have gained significantly over the last few months. 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.
  • Eight markets, including Japan, Australia, South Korea, Hong Kong and Taiwan, are in a Confirmed Uptrend. India, Indonesia and Singapore are in an Uptrend Under Pressure. China and Thailand are in a Rally Attempt.
  • Japan, India and Taiwan are trading the most above their 40-WMA. Median price percentage performance versus the 200-DMA is highest for India at 20%, followed by Japan at 8%. Across APAC, large caps trade 8% above the 200-DMA, while SMID stocks trade 4-5% above the 200-DMA, in terms of percentage price performance on a median basis.
  • Leaders (Stocks with an RS Rating greater than 70) continue to outperform across APAC. The proportion of leaders trading above the 50-DMA has seen improvement in Japan, Taiwan and Korea, and has lagged in India and Australia.
  • Energy stocks are extended in Japan and India. Large cap stocks in Japan are more extended than SMID stocks. In India, small cap stocks have seen a pull back over the last week. Refer to pages 12 and 13 for a list of stocks trading close to pivot ranges of early-stage bases.
  • Highlighted Focus List Idea: Nippon Telegraph & Telephone Corp (NTT.JP; 9432 JP). Refer to page 8 for an annotated chart.

APAC Weekly Summary

Posted on by Derek Higa

Key points:
• The MSCI Asia Ex Japan index (AAXJ) hasreclaimed its 50- and 100-DMAs. It has remained in a sideways consolidation since early
2023. Major APAC markets are constructive. 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.
• Eight markets, including Japan, Australia, South Korea, Hong Kong and Taiwan,are in a Confirmed Uptrend. India, Indonesia and
Singapore are in an Uptrend Under Pressure. China and Thailand are in a Rally Attempt. South Korea and Hong Kong were shifted
to a Confirmed Uptrend.
• Hong Kong had a seventh follow-through day after six that have failed since the February 2023 peak. The declining 50-DMA has
served as a major resistance level for the Hang Seng since September 2023. Look for follow-through daysto occur in the Mainland
Chinese indices to turn more constructive on a sustainable rally. Additionally, momentum should begin to widen across sectors if
the follow-through day in Hong Kong holds.
• The KraneShares CSI China Internet ETF (KWEB) is still 27% off highs and is 8% below its 200-DMA. Look for the index to retake
its 50-DMA and hold above it as a first step towards turning constructive. We recommend being patient regarding individual
stocks. Wait for them to retake key moving averages and form higher highs and higher lows. Refer to page 12 for minicharts of
constructive Chinese ADRs.
• Highlighted Focus List Idea: Fast Retailing (RETA.JP; 9983 JP). 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) faces resistance along its key moving averages and has remained in consolidation since early 2023. Continue to focus on ideas with rising relative strength and constructive price action. Trim extended ideas and reduce lagging ideas.
  • Five markets, including Japan, Australia and Taiwan, are in a Confirmed Uptrend. Five markets, including China and India, are in an Uptrend Under Pressure. Hong Kong, Thailand and South Korea are in a Rally Attempt. Taiwan and Australia were shifted to a Confirmed Uptrend. China was shifted to an Uptrend Under Pressure, while Hong Kong was shifted to a Rally Attempt.
  • Energy and Utility are the leading sectors across APAC over the last 52-week period. Energy and Utility are in the top-right quadrant of the APAC sector rotation chart. Among major APAC markets, these sectors are outperforming in Hong Kong and India.
  • Indian Energy and Utility stocks lead based on median four- and eight-week price performance. The percentage of stocks with a three-month RS Rating above 70 is highest for Hong Kong, followed by India.
  • The Indian government will present its budget on February 1. The government is expected to announce higher capex, particularly for infrastructure, railways and defense. Refer to pages 11-12 for a list of stocks that could be beneficiaries from the Indian budget.
  • Highlighted Focus List Idea: ABB India (AB.IN; ABB 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) continues to trade below all its key moving averages and has remained in consolidation since early 2023. Continue to focus on ideas with rising relative strength and constructive price action. Trim extended ideas and reduce lagging ideas.
  • Four markets, including Japan, are in a Confirmed Uptrend. Australia, India, Taiwan, the Philippines and Singapore are in an Uptrend Under Pressure. South Korea and China are in a Rally Attempt while Hong Kong is in a Downtrend. This week, India was shifted to an Uptrend Under Pressure, and China and South Korea were shifted to a Rally Attempt.
  • Hong Kong remains in a Downtrend and the index has continued to make lower lows since February 2023. The index has had six failed follow-through days since Feb 2023, the highest in recent history.
  • Only 15% and 18% of liquid stocks in Hong Kong trade above their 50- and 200-DMAs, respectively. The Utility and Energy sectors are holding up well, while Health Care is the most lagging sector. Refer to page 9 for the MSCI Hong Kong Index (EWH) constituents with rising relative strength and refer to page 10 for constructive setups in Hong Kong outside the EWH index.
  • Japan and India are the beneficiaries of capital flight from Hong Kong. Highlighted Focus List Idea: Fast Retailing (RETA.JP;9983 JP).