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) gapped down and failed to hold above the December low of $64. Although longer-term trends have remained intact, we recommend taking a cautious approach due to an elevated number of distribution days. Continue to focus on ideas with rising relative strength and constructive price action and trim extended ideas.
  • Six markets, including Japan and India, are in a Confirmed Uptrend. Australia, Taiwan and Singapore are in an Uptrend Under Pressure. China, South Korea and Hong Kong are in a Downtrend.
  • The Sensex is pulling back after making a new 52-week high this week. The index is trading 3% above its 50-DMA and 10% above its 200-DMA. Historically, the Sensex versus the 40-WMA tends to revert after reaching around the 10-12% range. Going forward, we expect the 40-WMA to catch up with the index.
  • Based on median price percentage change vs. their 200-DMA, large caps are less extended compared with mid and small caps. Refer to page 9-10 for mini-charts of the MSCI India (INDA) constituents that are trading constructively.
  • Highlighted Focus List Idea: Mankind Pharma (MP9.IN; MANKIND IN). 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) failed to hold above its 50- and 100-DMAs. Most APAC markets except China and Hong Kong remain constructive. Japan is breaking out to multi-decade highs, while most other markets are consolidating near prior highs. Focus on quality growth ideas with rising relative strength and constructive price action. Consider trimming extended ideas.
  • Ten markets, including Japan, India, Taiwan and South Korea, are in a Confirmed Uptrend. Hong Kong is in an Uptrend Under Pressure. China is in a Downtrend and Thailand is in a Rally Attempt.
  • We shifted Japan to a Confirmed Uptrend from an Uptrend Under Pressure as the Nikkei 225 broke out to a multi-decade high. Growth is leading value over the past two months, a trend that is similar to prior market rallies in Japan. Breakout trends are healthy and are above the one-year moving average. Look for improvement in near-pivot stocks as the market makes new highs.
  • Growth-oriented sectors such as Technology and Health Care have seen improvement over the last eight weeks. Refer to page 9 for a list of leading stocks (RS greater than 90) in Japan that are trading near pivot.
  • Highlighted Focus List Idea: Terumo (TERU.JP; 4543 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 pulled back and failed to hold above its 200-DMA. However, most major APAC markets remain constructive. Consider trimming extended ideas and focus on quality growth ideas with rising relative strength and constructive price action.
  • Ten markets, including Hong Kong, China, Taiwan, South Korea and India, are in a Confirmed Uptrend. Japan is in an Uptrend Under Pressure. Thailand and Malaysia are in a Rally Attempt.
  • Emerging markets except China are heading strongly into 2024. India and Taiwan are slightly extended in the near term. South Korea is catching up with improving breadth and the KOSPI is attempting to breakout to a new 52-week high.
  • Large cap stocks are leading the current rally in South Korea. Large caps have seen most improvement in median RS Rating over the last eight weeks. Refer to pages 9 and 10 for constructive large cap stocks and highly rated ideas in the MSCI South Korea Index (EWY).
  • Health Care and Technology are the leading sectors over the last eight weeks. Leading Industry Groups are Medical-Biomed/Biotech and Medical-Generic Drugs in Health Care, and Internet-Content and Computer-Tech Services in Technology.
  • Highlighted Focus List Idea: Naver (NHN.KR; 035420 KS).

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 consolidate near its 200-DMA ($65.8; -1%). We remain constructive on most major markets in APAC ex China. Focus on quality growth ideas with rising relative strength and constructive price action.
  • Seven markets, including India and Taiwan, are in a Confirmed Uptrend. Three markets, including Japan and Hong Kong, are in an Uptrend Under Pressure. China is in a Downtrend. This week, Australia and the Philippines were shifted to a Confirmed Uptrend.
  • On Friday, Hong Kong had its sixth follow-through day attempt this year. We have reviewed the prolonged Downtrend periods in Hong Kong since 2015. The current Downtrend has the highest number of failed follow-through days. In previous Downtrends, successful follow-through days were first seen in the Chinese indices. Given that the Chinese indices are making multi-year lows, the probability remains low for the current follow-through day in Hong Kong to work.
  • The Utility and Technology sectors in Hong Kong are relative outperformers over the last four to 13 weeks. Health Care ideas have seen improvement in the median RS Rating over the past eight weeks. Refer to page 10 for stocks of interest and page 11 for laggards in Hong Kong (including ADRs).
  • Highlighted Focus List Idea: PDD Holdings (PDD).

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 its 50-DMA support. We continue to view most major markets in APAC ex China as constructive. Focus on quality growth ideas with rising relative strength and constructive price action.
  • Five markets, including India, Taiwan and South Korea, are in a Confirmed Uptrend. Two markets, including Japan, are in an Uptrend Under Pressure. Five markets, including Hong Kong, are in a Rally Attempt. Thailand is in a Downtrend.
  • Emerging markets performance and U.S. Dollar performance tend to be negatively correlated. As the market expects the Fed to start cutting interest rates from mid-2024, the U.S. Dollar is likely to depreciate, and we expect this to bode well for emerging markets.
  • In emerging APAC ex China, the median RS Rating has improved the most over the last four weeks for the Energy, Utility and Transportation sectors. Refer to page 5 for notable outperformers in emerging markets.
  • Highlighted Focus List Idea: Aspeed Technology (ASP.TW; 5274 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) pulled back from its 200-DMA resistance and failed to hold above its 100-DMA. We remain positive regarding APAC markets. Wait for a constructive pullback in extended ideas for an entry point.
  • Four markets, including Japan and India, are in a Confirmed Uptrend. Two markets are in an Uptrend Under Pressure. Five markets, including Taiwan and Australia, are in a Rally Attempt. China and Hong Kong are in a Downtrend.
  • The Basic Material sector has improved over the past four weeks. The sector is gaining momentum in most major APAC markets with more pronounced outperformance in Australia, Japan, Indonesia and South Korea.
  • Mining-Gold/Silver/Gems is the leading industry group in the Basic Material sector based on median three-month RS Rating, followed by Mining-Metal Ores and Steel-Producers. Most of the leading stocks in these groups are from Australia, Indonesia and Japan. Refer to page 9 for a list of stocks near pivot from the Basic Material sector.
  • Highlighted Focus List Idea: Nippon Steel (NSSM.JP; 5401 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) is consolidating below its 200-DMA resistance, a level it has not held above since August. Most major markets have rallied off October lows. We will turn more bullish if indices breakout to new highs or above key resistance levels.
  • Three markets, including Japan and South Korea, are in a Confirmed Uptrend. Three markets, including Hong Kong, are in an Uptrend Under Pressure. Seven markets, including India, China and Taiwan, are in a Rally Attempt.
  • Since 2020, growth stocks in Japan have led value stocks during prior periods when the Nikkei has rallied. Growth stocks also led by a slight margin heading into the rallies in November 2020 and March 2023. In the last two-months, growth is leading value by a slight margin. We expect to the outperformance of growth stocks to intensify should the Nikkei 225 breakout to new highs.
  • Additionally, in previous rallies, the number of stocks near pivot has been higher than the rolling one-year average heading into a rally. Currently, the number is below the rolling one-year average, which is not ideal. We are looking for an improvement in the number of stocks near pivot and a significant increase in weekly breakouts, in addition to a Nikkei 225 breakout to raise conviction in a sustainable rally. Refer to page 12 for near-pivot stocks from MSCI Japan sectors.
  • Highlighted Focus List Idea: Sojitz (NIIW.JP; 2768 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) is consolidating below its 200-DMA resistance. Most major markets are trading constructively. We recommend a gradual approach to increasing risk as indices break above resistance levels.
  • Six markets, including Japan and Hong Kong, are in a Confirmed Uptrend. Seven markets, including India, China and Taiwan, are in a Rally Attempt.
  • Among the major APAC markets, Japan, Taiwan and India are the most favorable in our view. They are trading less than 3% off highs, and the number of weekly breakouts are near 52-week highs. However, we would like to see an improvement in stocks near pivot, along with a spike in breakouts to raise conviction in a sustainable rally.
  • In Japan, the spread between value and growth has decreased with growth stocks leading in the near term. Large cap stocks, especially in Technology, are outperforming. Refer to page 12 for a list of near-pivot stocks in Japan.
  • In India, small caps are outperforming. We notice improving momentum in Health Care and Technology. Refer to page 13 for a list of near-pivot stocks in India.
  • Highlighted Focus List Idea: Sun Pharmaceutical Industries (TIC.IN; SUNP 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) retook its 100-DMA and is near its 200-DMA resistance. We recommend a gradual approach to increasing risk as market conditions improve. To remain constructive, major indices must hold above key moving averages.
  • Six markets, including Japan, Hong Kong and South Korea, are in a Confirmed Uptrend. Seven markets, including India, China and Taiwan, are in a Rally Attempt.
  • Over the past eight weeks, the TAIEX has outperformed other APAC markets, led by the Technology sector. There has been a gradual improvement in weekly breakouts in Tech stocks in Taiwan. Look for a continued increase in stocks near pivot, along with a sudden spike in breakouts to raise conviction.
  • Technology is entering the top-right quadrant of the APAC sector rotation chart (refer to page 11). By major APAC markets, Technology stands out in Taiwan and South Korea. Among Technology Industry Groups across APAC, semiconductor-related groups are leading. Refer to page 16 for stocks of interest in Technology across APAC.
  • Highlighted Focus List Idea: TSMC (TSM.TW; 2330 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 recent lows and retook its 21- and 50-DMAs. We recommend a gradual approach to increasing risk as market conditions improve. Look for additional follow-through days and an increase in breadth to raise conviction in a sustainable rally.
  • Five markets, including Japan and Hong Kong, are in a Confirmed Uptrend. Eight markets, including India, China, Taiwan and South Korea, are in a Rally Attempt.
  • Hong Kong was upgraded to a Confirmed Uptrend. Year-to-date, there have been four failed follow-through days and the index has been making lower lows and lower highs. We want to see the Hang Seng index hold above prior lows and make higher highs for a meaningful change in trend. The index should rise and hold above its 50-DMA to turn constructive.
  • Breadth in Hong Kong has improved over the last two weeks. The Health Care and Technology sectors have outperformed other sectors based on median RS Rating and average price performance. Refer to page 9 for a list of stocks of Interest in Hong Kong.
  • Highlighted Focus List Idea: NetEase (NETE.HK; 9999 HK).