Asia Pacific Retail Research: Weekly Market Analysis

Broker Name: CGS International Securities

Date of Report: November 11, 2024

Indices of the Week

Nikkei 225 Index – Technical View

The Nikkei 225 continues to exhibit weak trends, ranging between 36,600 to 40,000. Last week’s attempt to break the 40,000 mark failed for the second time, indicating a potential larger bearish trend. A larger diamond top is forming, with a confirmed downside reversal due to a broken rising wedge pattern. Further bearish pressure below 35,000 could see new lows testing 34,000 or even 32,200.

Hang Seng Index (HSI) – Technical View

The Hang Seng Index is in a weak consolidation phase. Despite recent rebounds, it has struggled to close above the 21,000 mark, falling short of the near-term target of 21,800 to 22,100. A potential bearish flag formation and a strong bearish candlestick rejecting the 21,000 resistance suggest another corrective move downwards, possibly testing the 19,000 to 17,990 region before resuming its upward trend. Long-term targets remain at 26,179 and 30,257.

Dow Jones Industrial Average – Technical View

The Dow Jones Industrial Average saw a weak rebound at the 41,180-42,000 region but regained bullish momentum last Tuesday, breaking through the 42,900-43,000 resistance and reaching the long-term target of 44,000 earlier than expected. The trend is now bullish, with all Ichimoku indicators showing strong momentum. The 14-period DMI confirms the bullish strength, with a long-term target of 44,550-46,000.

S&P 500 Index (SPX) – Technical View

The S&P 500 Index experienced a strong post-election rally, pulling into new all-time highs and testing the next resistance level at 6,000. This comes after the index showed resilience along its 50-day moving average, maintaining a clear pattern of higher highs and higher lows. With November and December’s strong seasonality and RSI in a bullish zone, the path of least resistance continues to point higher.

CSI 300 Index – Technical View

The CSI 300 Index reached its short-term upside target at 4,120 before reversing and closing lower below the 4,200 psychological level. This indicates that the rebound from 3,800 has been corrective, with further correction likely. Long-term bullish sentiment remains strong, with the MACD indicating bullish momentum. The index is expected to form a larger 3-wave corrective structure, with strong support at 3,500-3,700 and a long-term target of 4,400.

MSCI Singapore Index – Technical View

The MSCI Singapore Index corrected and rebounded, testing 348.00 and nearly reaching the target of 360.00. The index is likely to edge higher and break the 360 resistance, with long-term MACD showing strong bullish momentum. The 23-period ROC shows signs of a bullish rebound above the zero line. The major long-term target is set at 372.00.

SET Index (Thailand) – Technical View

The SET Index reached near the short-term target of 1,490 before correcting downwards. The index is likely to head lower, having formed a potential head and shoulder bearish reversal pattern. The Stochastic Oscillator shows a decline after an overbought crossover, with 23-period ROC and 14-period DMI indicating weakness. Despite the gloomy outlook, the long-term trend remains bullish, with targets at 1,521 and 1,544.

Jakarta Composite Index – Technical View

The Jakarta Composite Index broke below 7,450 and 7,300 earlier than expected, with Ichimoku showing a clear three bearish death cross signal. The long-term MACD confirms a crossover at the top, with downside momentum likely to accelerate, testing major support at 7,050.

Nasdaq Composite (IXIC) – Technical View

The Nasdaq Composite broke out above prior all-time highs, resuming a short-term uptrend. The index held support around the 50-day moving average and 61% Fibonacci extension level. With RSI showing bullish confirmation, the path of least resistance remains higher, both short-term and in alignment with the major secular uptrend.

Russell 2000 (RUT) – Technical View

The Russell 2000 saw a strong rally post-election, outperforming other major indices. The index is pushing towards prior all-time highs near 2,460.00, with RSI firmly above 60.00, indicating bullish confirmation. Holding breakout levels near 2,350.00 suggests continued short-term upside.

Company Analysis

Singapore Airlines (SIA) – Weaker Than Expected 2QFY25

Singapore Airlines reported a core net profit of S\$296 million in 2QFY3/25, 29% below the preview of S\$416 million, and 54% lower year-on-year and 32% lower quarter-on-quarter. The market is likely to react negatively, given that 1QFY25 was only 38% lower year-on-year and 21% lower quarter-on-quarter. A “Reduce” recommendation is reiterated as yields continue to weaken, with a target price (TP) lifted to S\$6, rolling forward to end-CY25F with an unchanged P/BV of 1.1x.

Sembcorp Industries – Divesting Recycled Waste Asset

Sembcorp Industries is in the process of divesting a recycled waste asset. This strategic move aims to streamline its operations and focus on core competencies. Detailed financial impacts and future strategic directions will be closely monitored and reported as they unfold.

OCBC – On Track to Meet FY24F Targets

OCBC is on track to meet its FY24F targets. The bank’s strategic initiatives and strong financial management have positioned it well to achieve its financial goals. Investors can expect continued stability and growth in the upcoming quarters.

United Overseas Bank – Capital Return on the Cards

United Overseas Bank (UOB) is considering a capital return to shareholders. This move underscores the bank’s robust financial health and commitment to enhancing shareholder value. Details on the form and timing of the capital return will be disclosed as they become available.