In this webinar, Director, Research Analyst Derek Higa discusses global ideas in the Internet and Media space and shares his thoughts on evolving themes such as Connected TV and the OTT landscape.
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:
- Leading markets have witnessed a pullback to their 21-DMA support. Although we remain constructive on markets, we advise investors to avoid chasing extended ideas and trim positions if held. Refer to page 13 and 14 for a list of extended stocks.
- Eight out of 13 markets are in a Confirmed Uptrend, one is in an Uptrend Under Pressure, three are in a Rally Attempt, and one is in a Downtrend.
- Markets have turned volatile again. The average number of distribution days has risen to 3.7.
- Health Care stocks have outperformed in the short and long term, led by Hong Kong stocks. Refer to page 5 for Hong Kong sector rotation chart.
- China stocks declined due to fear of a new viral epidemic. Hong Kong was downgraded by one notch at Moody’s. Refer to page 4 for an annotated chart for Hang Seng.
- Refer to page 15 for actionable Focus List names.
- Highlighted Focus List ideas: HEC Pharma ( YHEC.HK ), Shandong Weigao ( SDW.HK ).
Comcast
Key points:
- Shares are forming an 18-week double bottom base and are trading 1% away from the pivot price. We recommend adding to positions in anticipation of momentum continuing through earnings results next week.
- Solid fundamental ratings: Composite Rating of 97, EPS Rank of 92, and SMR Rating of A.
- Technical ratings are improving, aided by an increase in Up/Down Volume ratio and positive A/D Rating.
- Yesterday Comcast ( CMCSA ) unveiled details about its streaming platform Peacock at an investor conference. Peacock has a differentiated monetization strategy compared to its peers’ focus on ad-supported premium content. In the on-demand video segment, 65% of the content is ad-supported, but with growing subscriber fatigue, management believes the proportion of people willing to subscribe to numerous premium streaming services will decline. This provides an opportunity for a service with light ad-supported premium content at a lower subscription price point.
APAC Weekly Summary
Key points from this week’s report:
- The MSCI Asia is approaching two-year highs after recently breaking above April 2019 highs. There is no change to market conditions with a majority in a Confirmed Uptrend.
- Major markets are trading near 52-week highs and are trading comfortably above their 21-DMA. We would not be surprised to see the start of a consolidation soon due to the recent hot streak. We recommend a disciplined approach, avoid chasing.
- Stocks breaking out in APAC markets are rising steadily, approaching March 2019 highs.
- South Korea is trading near resistance at April 2019 highs and is approaching 52-week highs. Technology, Consumer Staple, and Health Care stocks are leading while Energy stocks are lagging. Refer to page 4 for South Korea sector map and page 5 for an annotated Datagraph of the KOSPI.
- Highlighted Focus List ideas: Kakao ( DUM.KR ) and Samsung Biologics ( BCS.KR ). Refer to page 7 and 9 for annotated Datagraphs, respectively.
- Refer to page 10 for South Korea ideas trading near pivot.
- Refer to page 11 for actionable Focus List ideas.
APAC Weekly Summary
Key points from this week’s report:
- Asian markets are constructive despite rise in geopolitical tensions.
- A majority (eight of 13 markets) are in a Confirmed Uptrend, two are in an Uptrend Under Pressure, and three are in a Rally Attempt.
- Average distribution day count has increased to 4.1 compared with 3.4 three weeks ago. We expect this to decline as distribution days expire next week.
- We continue to recommend being overweight China, Japan, Taiwan, and India. Recent pullbacks in the market could be an opportunity to add to positions in leading growth stocks. We believe volatile action over recent weeks has not derailed these uptrends.
- Momentum in Technology stocks is continuing. Refer to page 3 and 4 for Sector Rotation graphs for Hong Kong, Japan, South Korea, and Taiwan.
- Refer to page 5 for Technology stocks on our APAC Focus List along with top picks.
- Highlighted Focus List ideas: Murata Manufacturing (SM@N.JP) and Disco (DISC.JP). Refer to page 7 and 9 for annotated charts.
- Refer to page 10 for a list of other Technology stocks of interest.
- Refer to page for 11 other actionable ideas on our list.
APAC Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- This is our last note for 2019. Our next note will be published on January 8, 2020.
- Last Friday, we shifted Hong Kong, China, and South Korea to a Confirmed Uptrend from an Uptrend Under Pressure.
- Seven of thirteen markets are in a Confirmed Uptrend and the average number of distribution days declined to 3.4 from 5.7, relieving pressure.
- We recommend investors stay disciplined and avoid chasing extended ideas as a majority of markets test resistance at April highs.
- Year-to-date, six markets have gained by double digits; China leads the pack with a 34% gain. Refer to page 3 for a Comparison Graph of APAC Markets.
- Our APAC Focus List count increased 3x over 2018 this year. Refer to page 5 for an APAC Focus List breakdown by geography and sector.
- Refer to page 6 for key themes to keep on your radar in 2020.
- Highlighted Focus List ideas: Sk Hynix ( HYI.KR ) and Nintendo ( NNDO.JP ). Refer to pages 8 and 10 for annotated charts.
- Refer to page 11 for APAC Actionable ideas.
APAC Weekly Summary
Key points from this week’s report:
- The MSCI Asia ex Japan bounced back from its 200-DMA on low volume. We expect the markets to remain in consolidation mode this week as the December 15 tariff deadline approaches.
- Four of 13 markets are in a Confirmed Uptrend, six are in an Uptrend Under Pressure, two are in a Rally Attempt, and one is in a Downtrend.
- Hong Kong Health Care stocks have pulled back recently. However, stocks are still constructive, trading 7% on average above their 200-DMA. In contrast, the Hang Seng index is trading 3.5% below its 200-DMA. We remain positive on Health Care. The pullback could remain constructive, which could provide an aggressive buy point to add to positions.
- Rotation and improved momentum in Basic Material and Capital Equipment stocks is occurring. Refer to page 6 for stocks trading near a pivot in these sectors.
- Refer to page 7 for actionable ideas in APAC.
- Highlighted idea: Asian Paints ( API.IN ). Refer to page 5 for annotated chart.
APAC Weekly Summary
Key points from this week’s report:
- Four of 13 markets are in a Confirmed Uptrend, six are in an Uptrend Under Pressure, two are in a Rally Attempt, and one is in a Downtrend. Distribution has elevated in the short term.
- We shifted Australia to an Uptrend Under Pressure from a Confirmed Uptrend.
- We remain cautious on the Hong Kong market amid rising distribution days. Health Care has pulled back after significant gains, but we believe the action is constructive. Refer to page 4 for the Hong Kong sector rotation graph.
- Stick with preferred markets. Japan, India, and Taiwan are leading markets in our view. In Japan, Capital Equipment stocks are outperforming.
APAC Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- Three out of 13 markets are in a Confirmed Uptrend. We shifted China, South Korea, and Singapore to an Uptrend Under Pressure. Overall, average distribution in APAC has elevated to slightly above four days this week.
- Japan, India, and Taiwan are the only markets in a Confirmed Uptrend and continue to show leadership as they trade near all-time highs. Although we continue to be bullish on the China A-share market, we are noticing some weak action among leaders that could raise caution.
- Revisiting value versus growth in Japan, value stocks have gained significantly since August, however, their six-month performance remains below that of growth stocks.
- The Health Care, Basic Materials, and Capital Equipment sectors are displaying momentum. See page 8 for Capital Equipment stocks near pivot.
- Refer to page 9 for actionable ideas on our Focus List.
- Highlighted Focus List idea: Keyence ( KEYE.JP ).
APAC Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- The Hang Seng is still in an Uptrend Under Pressure — refer to page 5 for an annotated chart. Headlines of civil unrest in Hong Kong are creating some upheaval, but not all is bad. We recommend staying overweight Health Care.
- In Hong Kong, Health Care, Consumer Cyclical, Consumer Staple, and Financial stocks are holding up the best in a difficult market environment. Top-rated stocks have held up relatively better.
- Refer to page 6 for the Hong Kong Sector Rotation Chart highlighting noticeable rotation and the progression of outperformance in the Health Care sector since May.
- Highlighted Focus List idea: Wuxi Biologic Cayman ( WXBO.HK ). Refer to page 8 for an annotated chart.
- See page 9 for top-rated stocks near pivot in Hong Kong.
- Actionable ideas can be found on page 10.
