[HK Stocks Podcast] Hang Seng Index, HKEX, Sunny Optical, Yanzhou Energy, Kuaishou, Alibaba - Post-market Analysis for February 10

Bullish investors are targeting a rebound to 27,300 points and are holding bullish warrants overnight (stop-loss at 25,500 points); bearish investors, due to shrinking market turnover, plan to short near the highs targeting bearish warrants (stop-loss at 27,450 points).

Simon: The overall trend of the Hang Seng Index today showed a slight upward movement. By closing price, the Hang Seng Index closed at 27,183 points, with an increase of approximately 0.5% for the day, indicating a relatively limited rise. Trading volume was weak, showing varying degrees of contraction compared to the previous 1-2 trading days and the past 5-10 trading days, becoming a significant feature of the current market.

Market sentiment is divided between bulls and bears. Bullish investors believe that the Hang Seng Index could rebound to 27,300 points, which is over a hundred points away from the current closing price. Therefore, these investors are opting for bullish warrants as part of their strategy. However, from a spatial perspective, this expected rise corresponds to limited upside potential, with insufficient confidence in further upward movement. On the other hand, bearish investors, based on the characteristic of continuously declining trading volume, believe that if the Hang Seng Index continues to climb or touches key resistance levels, it would be an opportune time to short, favoring put warrants.

From a technical analysis perspective, the current market is dominated by 'sell' signals. The support level for the Hang Seng Index is around 26,661 points, with resistance near 27,700 points, which is higher than the 27,300 points some investors are watching, bringing some optimism to the market. Currently, there is a wide variety of bull certificates available for the Hang Seng Index, showing significant differences in leverage and product terms across different price levels. Bull certificates near the 26,000-point mark exhibit better leverage performance, with some products reaching up to 24 times or nearly 25 times leverage, while the average leverage level is about 23 times. Even more conservative products near 25,800 or 25,900 points offer leverage above 20 times. Bull certificates closer to 26,200 points have even higher leverage, reaching 26-27 times.

Overall, when choosing bullish warrants, investors who prefer lower stop-loss risk can opt for products closer to the support level below. Although this might sacrifice some leverage, it effectively reduces the likelihood of hitting the stop-loss. For those seeking higher leverage, they can choose products with closer strike prices. Investors can balance between leverage and risk according to their investment needs.

2. HKEX (00388.HK): Has the stock price bottomed out? Where is the effective support? Some investors in the CBBC market are entering positions with bullish warrants (stop-loss at HKD 386).

Simon: Today, HKEX's share price slightly declined, continuing the trend of shrinking trading volumes, with today’s volume further decreasing compared to yesterday. Over the past two days, trading volumes have significantly retreated compared to earlier periods. Despite the decline in closing price, the fluctuation range was minimal, showing relatively stable overall movement. Currently, market participants are widely focused on whether HKEX’s share price has bottomed out and whether it will continue to fall. There is also strong demand for determining its short-term support levels.

From a technical analysis perspective, the short-term trend of the Hong Kong Exchanges and Clearing Limited (HKEX) has not yet shown a clear direction, with bullish and bearish technical indicators basically level, making it temporarily impossible to make a definitive judgment on its subsequent trend. In terms of support levels, the first short-term support for HKEX is at HKD 409. Currently, the stock price remains stable near the HKD 400 mark; if this support level is broken, the stock price will likely drop to HKD 393, at which point it would fall below the key psychological level of HKD 400. However, it is still too early to conclude that the stock price will fall below HKD 400, making HKD 409 the critical support level that requires close attention at this stage.

In the warrant market, some investors have already positioned themselves in bullish warrants for HKEX. Considering investment safety, investors deploying bull warrants may prioritize products with a recovery price below HKD 393. Currently, there are HKEX bull warrant targets in the market with recovery prices such as HKD 380 and HKD 388, allowing investors to select products based on their terms that align with their investment preferences.

3. Sunny Optical Technology (02382.HK): Is HKD 54 a valid support level? Investors should watch Put Warrants for hedging operations.

Simon: Sunny Optical closed slightly higher today at 59 HKD. However, from the overall recent trend, the stock price has been hovering at low levels for an extended period and gradually moving downward over the past few days, approaching the lower Bollinger Band. The price range around fifty HKD has consolidated for some time. Reviewing historical trends, Sunny Optical experienced similar low-level consolidations in mid-January and late January this year, both followed by declines. Whether this consolidation will lead to another drop requires close attention from investors.

Regarding investors' concerns about whether 54 HKD is a support level, the analysis shows that 54 HKD offers some support, but it is not the first short-term support level. The first short-term support for Sunny Optical is at 57.4 HKD. If this level is breached, the stock price will drop to 53.9 HKD, which means the 54 HKD support level will only be tested after 57.4 HKD is broken. Thus, 57.4 HKD becomes the critical level to watch closely.

In the warrant market, some investors are cautious about the future trend of Sunny Optical Technology and have chosen to deploy Put Warrants for hedging purposes. Notably, from a technical signal perspective, Sunny Optical Technology currently shows a strong buy signal, with bullish indicators being relatively dominant. However, technical indicators are only for reference, and current short-term market sentiment is cautious. If investors believe the stock price might continue to decline, they can position related hedging products based on the above-mentioned support levels.

4. Yanzhou Energy (01171.HK): The share price continues to break through highs; can it stabilize and surpass HKD 13? Some investors are watching call warrants with an exercise price of HKD 14.

Simon: Yanzhou Energy's recent short-term performance has been impressive, with the stock price continuously breaking new highs. During today's session, the stock reached a high of 12.91 dollars, nearing the 13-dollar mark. However, trading volume did not significantly increase, remaining at par with previous levels. This characteristic warrants attention from investors. Market participants are generally focused on whether, if the uptrend continues, Yanzhou Energy’s stock price can successfully stabilize and break through the 13-dollar level.

Technically speaking, HKD 13 is a key resistance level for Yanzhou Energy. If this level is successfully broken, the stock price could rise further to HKD 14.1, which has also increased market attention toward Yanzhou Energy's call warrants. Some investors are already watching call warrants with an exercise price of HKD 14. Currently, there are several available call warrants with exercise prices of HKD 14 or higher, expiring around mid-May, leaving approximately three months until expiry. However, considering Yanzhou Energy’s significant cumulative gains in this round, if the stock undergoes adjustments or sideways trading, time decay for these short-dated call warrants will accelerate.

In comparison, call warrant products with exercise prices around HKD 15.5 and HKD 15.7 expire in July, offering about five months until expiration. This longer time frame reduces time value decay even if the stock trades sideways in the short term, giving investors stronger downside protection. However, these products come with relatively lower leverage, approximately 5.1–5.2 times. Investors can choose targets based on their outlook for Yanzhou Energy’s future movement. If they believe the stock can break through HKD 14 in the short term, they may consider high-exercise-price products with shorter durations. If they expect sideways consolidation, long-dated products would be a better choice.

5. Kuaishou-W (01024.HK): Investors optimistic about a post-Chinese New Year target price of HKD 80 hold call warrants with an exercise price of HKD 88.93.

Simon: Kuaishou-W’s stock price rebounded slightly today. However, looking at the overall trend recently, the stock has been hovering near the bottom of the Bollinger Band, showing a sideways consolidation pattern. Although daily performance seems acceptable, the prolonged low-level consolidation has made the overall performance less than ideal. Some investors remain optimistic about Kuaishou-W’s future trajectory, expecting the stock price to reach 80 dollars post-Chinese New Year (end of February) and are holding call warrants with a strike price of 88.93 dollars.

From a technical analysis perspective, the first short-term resistance level for Kuaishou-W is HKD 76.9. If this level is successfully broken, the stock price could rise further to HKD 81.8. Hence, if the uptrend continues, the likelihood of the stock breaking above the HKD 80 mark exists, making HKD 76.9 the key resistance level that needs to be closely watched for a breakout.

In terms of call warrant positioning, there are fewer available options near the HKD 80 exercise price, with only one product having an exercise price of HKD 81. This product expires in August, leaving about six months until expiration, but its out-of-the-money percentage is relatively high at 16%. If investors prefer products with a closer strike price, call warrants with exercise prices between HKD 75 and HKD 77 would be a better choice. There are 19 products in this range, with expiration dates mainly concentrated in June and December. For investors planning to bet on Kuaishou-W breaking through the HKD 76.9 resistance level in the short term, products with exercise prices around HKD 70.5 or HKD 75.9 offer closer strike prices and stronger competitiveness, making them worth focusing on.

6. Alibaba-W (09988.HK): Benefiting from the surge in Qwen, this week's target is to look at 165-170 yuan; In the窝轮market, some investors are holding bullish certificates with a recovery price of 140 yuan.

Simon: Today, Alibaba-W stood out among various stocks with a gain of approximately 1.65%. However, the trading volume did not rise in tandem, but rather slightly contracted, and the trading volumes for the past two days have both shown signs of contraction. In fact, today most stocks in the Hong Kong market experienced a slight reduction in trading volume, possibly influenced by pre-holiday market sentiment on one hand, and related to the overall market conditions on the other. This market characteristic is worth noting for investors.

Benefiting from the surge in Qwen, market investors are generally bullish on Alibaba-W's subsequent performance, expecting the stock price to rise to the range of 165-170 yuan this week. Some investors in the warrant market are deploying bullish contracts with a recovery price of 140 yuan. From a technical perspective, Alibaba-W’s short-term resistance level is around 168 yuan. If this level is broken, the stock price may further rise to 173.5 yuan. Notably, 168 yuan is also the midline position on the Bollinger Bands on the daily chart. Recently, Alibaba-W’s stock price has been operating below the Bollinger Bands midline. If it can successfully rise above 168 yuan, it would signal a breakout above the Bollinger Bands midline, which would be a positive indicator for subsequent trends.

From the perspective of bullish certificate positioning, the current support levels for Alibaba-W are 152.5 yuan and 147.5 yuan respectively. Therefore, it is recommended that investors choose bullish certificate products with a recovery price below 147 yuan, which can effectively reduce investment risk. Currently, there is an adequate supply of such bullish certificates in the market, and investors can select appropriate targets for positioning based on their own risk tolerance.

Warm reminder: This article does not constitute any investment advice and is for reference only.Market data, views, and analysis contained herein are subject to change without prior notice. We shall not be liable for any loss or damage caused by reliance on the information in this article. Technical analysis only shows whether certain technical conditions are met; asset performance should be comprehensively evaluated with additional information. Trading decisions should not be made solely based on this article. Please note that past performance is not indicative of future results.

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