NetEase (9999) Analysis: Technical indicators severely oversold, 169-yuan support level becomes critical

$NTES-S (09999.HK)$ Short-term trend analysis for NetEase: Technical indicators severely oversold, 169-yuan support level becomes critical

NetEase-S (09999.HK) has continued to show weakness in its recent stock price. As of February 26th, it closed at 175.4 yuan, with a decline of 1.63%. The 10-day moving average is at 184.22 yuan, the 30-day moving average is at 199 yuan, and the 60-day moving average is at 208.11 yuan. Multiple moving averages are arranged in a bearish pattern, indicating significant technical pressure. In terms of technical indicators, the RSI has dropped to 28, an oversold level; the Williams %R shows 'oversold zone, buy'; the stochastic oscillator issues a 'buy signal', and the ROC indicator suggests 'severe over-depreciation, potential bottoming out, buy'. Several indicators suggest short-term rebound opportunities. The overall technical summary signal is 'buy' with an intensity of 9, indicating that the technical picture is brewing for a reversal. This article will combine the latest technical data, market news, and insights from the February 6th and January 16th [HKEX Podcast] to provide investors with an in-depth analysis of NetEase's short-term trends. It will also explain in detail how to use warrants and bull/bear certificates to capture potential opportunities while reviewing the recent performance of these products.

From a technical perspective, NetEase is currently in a bottom-building phase after being oversold. Regarding support and resistance levels, based on the latest technical data, NetEase’s primary short-term support level is at 169.2 yuan. This position is close to the low area during the stock price pullback on February 25th and is near the 100-day moving average, providing some support. If this position fails, a more critical support level will be at 159.9 yuan, which is the bottom of the dense trading zone since Q3 of 2025 and is also the widely watched bull/bear dividing line in the market. For resistance levels, the stock price is currently capped at 186.4 yuan, a short-term resistance level corresponding to the rebound peak in mid-February and the location of the 10-day moving average. If this level can be successfully broken through, the next resistance will be at 204 yuan, where the 30-day moving average is located and which was the top of the downtrend platform in late January.

Correlation analysis between column viewpoints and recent trends

February 6th [HK Stocks Podcast] Hang Seng Index, Xiaomi Group, NetEase, China Construction Bank, Li Auto, China Shenhua

Reviewing Simon's views from the February 6th [HKEX Podcast], he pointed out that NetEase's recent trend was weak, closing at 188.3 yuan and hitting an intra-day low of 185.1 yuan, near the lower Bollinger Band on the daily chart. Simon mentioned that some investors were concerned about the downside target and whether it was suitable to catch a rebound at the moment. He analyzed that the current support level was 180.4 yuan, and if it breaks below that, it might drop to 165.9 yuan. He suggested waiting until the stock price approached 165.9 yuan and then deciding whether to enter based on the overall market sentiment and changes in trading volume.

Comparing with the current market situation, NetEase’s stock price has fallen from 188.3 yuan on February 6th to 174.8 yuan on February 26th, a drop of approximately 7.2%. During this period, the lowest point was 169.2 yuan, already breaking through Simon's proposed support level of 180.4 yuan and gradually approaching the target range of 165.9 yuan. Simon's risk warning has been validated, and his suggestion to wait for a lower position to establish positions has helped investors avoid the intermediate downtrend.

Reviewing Simon's insights from the January 16 【Hong Kong Stock Podcast】, he pointed out that NetEase’s share price closed at HKD 208.4, with the market's core debate focusing on whether HKD 204 constituted the bottom of this correction. Simon proposed a short-term support level at HKD 200; if that level were to break, the subsequent downside could test HKD 191. Comparing the current market situation, the stock price has fallen through all the previously identified support levels, indicating a deeper-than-expected adjustment. Simon’s advice on warrant investments was highly valuable, recommending investors prioritize products with a strike price near HKD 220. He advised against blindly deploying deep-out-of-the-money products beyond HKD 220 due to their larger out-of-the-money gap, helping investors avoid risks in a continuously falling market.

Market News: Diverging views among major banks; valuation considered attractive

In late February, several major banks published their latest views on NetEase. SPDB International issued a research report stating that since NetEase had met the requirements for converting to a primary listing in Hong Kong, the company is in communication with the Hong Kong Stock Exchange to advance the matter, which could attract southbound capital inflows in the future. Considering the expected launch of new games, they adjusted the target price to HKD 236, corresponding to FY26E/FY27E 16.8x/15.2x P/E, and maintained a 'Buy' rating, citing an attractive current valuation. CITIC Securities also maintained a 'Buy' rating with a target price of HKD 234, highlighting robust operating performance in Q4 2025, comprehensive AI empowerment across scenarios, strong pipelines including titles like 'Sea of Forgetfulness' and 'Infinity,' as well as synergistic advantages from globalization, multi-platform, and AI-focused strategies.

However, Morgan Stanley took a more cautious stance, lowering its revenue forecasts for NetEase’s gaming business by 2.1% for 2026 and 2027 to reflect delayed revenue recognition cycles, with non-GAAP operating profit forecasts correspondingly reduced by 4.2%. The US stock target price was lowered from USD 168 to USD 154 while maintaining an 'Overweight' rating. The divergence in opinions among major banks reflects differing views on NetEase's short-term gaming revenue recognition timing, though the general consensus remains optimistic for the medium to long term.

Reviewing the product mentioned in this column on February 24, its performance over the following two days demonstrated the high sensitivity of warrants. During these two days, the underlying NetEase stock fell by 2.56%, driving gains of 7% in J.P. Morgan Put Warrants (24127) and UBS Put Warrants (24274), fully illustrating the hedging value and leverage characteristics of derivatives in a falling market.

Warrant Deployment Strategy

Under current market conditions, investors can choose from the following products based on their outlook. If one believes in a short-term oversold rebound for NetEase and expects it to hold above the HKD 169.2 support level and recover towards the HKD 186.4 resistance level, call warrants or bullish contracts could be considered. UBS Bull Contract (68651) $UB#NTES RC2604E.C (68651.HK)$ has a recovery price of HKD 153, approximately 12.5% below the current price, offering actual leverage of 7.3 times with the lowest premium. The recovery price is set below the HKD 159.9 support level, providing a relatively safe buffer. UBS Bull Contract (54539) $UB#NTES RC2612A.C (54539.HK)$ has a recovery price of HKD 151, about 13.6% below the current price, with actual leverage of 6.5 times and low premium, suitable for investors optimistic about a rebound.

Conversely, if investors believe NetEase’s weakness will persist, remaining capped by the HKD 186.4 resistance level and testing the HKD 159.9 support, put warrants could be considered for bearish positioning. UBS Put Warrant (24274) $UB-NTES@EP2608A.P (24274.HK)$ offers 3.1 times leverage with a strike price of HKD 190.78, approximately 9.1% above the current price, making it an out-of-the-money put warrant with favorable leverage and implied volatility characteristics, suitable for capturing continued downward price movements. J.P. Morgan Put Warrant (24127) offers 3 times leverage with a strike price of HKD 190.88, featuring the highest leverage and the lowest premium and implied volatility among similar products, allowing for tight tracking of the underlying stock's movement, making it the preferred choice for bearish positioning.

Interactive Questions:

1. Regarding the short-term trend of NetEase, what do you think the stock price will do at the support level of $169.2?

A. Successfully holds steady, rebounds to challenge resistance at $186.4

B. Breaks below support, tests $159.9

C. Consolidates within the range of $169-$180

Feel free to leave a comment sharing your choice and thoughts!

Reminder to everyone: Follow Jenny’s Hong Kong stock warrants updates for more professional market analysis and product insights.

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