Technical Analyst - Global with an Asian focus, Aletheia Capital

Chris Roberts

Technical Analyst - Global with an Asian focus

Independent and original Asian investment research

Aletheia Capital

Aletheia Capital (HK) Ltd. (previously known as Asianomics) combines the extensive knowledge of its experienced team with technology and regulatory changes to disrupt Global Markets business in Asia. The firm is completely independent with no conflicts of interest either on Investment Banking advisory or Capital Markets execution.

Technical Analysis

If market participants were to vote for a company to be the poster-boy for the Asian bull market that started in early 2016, the hands down winner would be Tencent (700 HK – HKD411.40). Not only does the stock have the most significant weighting in the MSCI China Index (Tencent and Alibaba account for more than 30% of the benchmark), but earlier this year it even usurped Samsung Electronics to become the leading stock in the MSCI Asia Free ex-Japan regional benchmark.At last week’s new all-time high of HKD439.60, Tencent was up 145% from the late December 2016 low of HKD179.60, easily outperforming the 60% gain of the MSCI China or the MSCI Asia Free ex-Japan’s 43% advance.The default option this year has been to buy the dip or if no dip, buy a new high. But stepping back from the shorter-term charts and focusing on monthly and weekly charts shows similar set-ups to the current situation have occurred on a number of previous occasions since 2006 and they did not end well for Tencent. Buy the dip…not so fast.

If market participants were to vote for a company to be the poster-boy for the Asian bull market that started in early 2016, the hands down winner would be Tencent (700 HK – HKD411.40). Not only does the stock have the most significant weighting in the MSCI China Index (Tencent and Alibaba account for more than 30% of the benchmark), but earlier this year it even usurped Samsung Electronics to become the leading stock in the MSCI Asia Free ex-Japan regional benchmark.At last week’s new all-time high of HKD439.60, Tencent was up 145% from the late December 2016 low of HKD179.60, easily outperforming the 60% gain of the MSCI China or the MSCI Asia Free ex-Japan’s 43% advance.The default option this year has been to buy the dip or if no dip, buy a new high. But stepping back from the shorter-term charts and focusing on monthly and weekly charts shows similar set-ups to the current situation have occurred on a number of previous occasions since 2006 and they did not end well for Tencent. Buy the dip…not so fast.

MSCI AC Asia ex Japan Index (MXASJ INDEX)

Tencent (700 HK): Buy the Dip? Not so Fast…