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) 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).

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).