[HK Stocks Podcast] Hang Seng Index, CATL, Huaneng Power, JD.com, Baidu, Zijin Mining - Post-market analysis on March 5

Market Analysis: Bullish and Bearish Views Focus on a 300-point Fluctuation Range; Key Technical Levels Guide Deployment

Simon: Let’s first review today’s market performance. The Hang Seng Index closed at 25,321 points today (March 5), recording a slight rebound with an increase of approximately 0.28%. Although the index halted its decline, from the closing level, it remains below the lower band of the daily Bollinger Bands, indicating that today’s rebound was relatively limited and can only be seen as an initial stabilization without a clear upward breakout signal.

Observing investor sentiment in the market, optimistic investors continue to hold bullish warrants with a recovery price of 24,878 points, expecting about 300 points of upside potential in the near future. On the other hand, bearish investors are focusing on relatively cheaper bearish warrants, believing the index may test the 25,000-point level tomorrow. Summarizing both bullish and bearish perspectives, although this only reflects some participants’ views, it shows that the expected volatility range has narrowed to around 300 points—bullish investors expect a 300-point rise while bearish targets at 25,000 points are also roughly 300 points away from current prices. This indicates that investors currently maintain a cautious stance and anticipate that the broader market will likely remain in a range-bound trading pattern in the short term.

From a technical perspective, the current key support for the Hang Seng Index is around 24,800 points, approximately 500 points away from the closing price, while the resistance level is near 26,300 points, about 1,000 points higher. If the index unfortunately breaks below the 24,800-point support, there is a greater likelihood of further testing the 23,800-point level. Conversely, if it successfully breaks above the 26,300-point resistance, the index could rise towards the 27,000-point level. These critical levels can serve as references for strategic deployment.

When selecting bull or bear contracts, investors should note that market volatility is difficult to predict precisely. Even if the short-term expected range is just 300 points, it’s still advisable to choose products with relatively conservative forced recovery prices to manage risk. For instance, based on the support at 24,800 points, one may select bull contracts with more distant forced recovery prices. Similarly, for resistance at 26,300 points, even though it is 1,000 points away from the current price, one could consider bear contracts with safer recovery prices. Adopting a prudent product selection strategy based on support and resistance levels helps reduce the risk of being forced out. After deciding on recovery prices, investors should compare quotes and premiums of different products to pick the most suitable option. Currently, there are abundant choices of bull and bear contracts linked to the Hang Seng Index, providing ample supply. Investors should focus on selecting appropriate recovery levels based on their own judgment, then make final decisions by comparing quotes and premiums. New investors with questions are welcome to consult our colleagues for the latest market information.

2. CATL (03750.HK): Stock rebounds close to the 500-yuan mark; caution needed when choosing call warrants due to out-of-the-money levels

Simon: Let's analyze the performance of CATL (03750). The stock saw a significant rebound today (August 5), closing at 499.8 yuan, very close to the important psychological level of 500 yuan. Whether the stock price can break through or stabilize above this round number is often psychologically impactful for investors.

From a technical perspective, the closing price of 499.8 yuan has brought the stock price back near the middle line of the Bollinger Band. In previous days, the stock price remained under pressure below the middle line, but today’s rebound successfully recovered some losses. Currently, the middle line of the Bollinger Band is around 507 yuan, reflecting that the stock trend has somewhat improved. Investors are paying attention to where the next upside target might be if the stock continues its rebound.

Based on a summary of technical signals, short-term indicators remain neutral without a clear direction. Assuming the stock continues to rise, the first resistance level would be around 519 yuan, and a successful breakout could push it towards 544 yuan. In terms of the warrant market, some investors have noticed call warrants with a strike price of 629.38 yuan not tracking the underlying price properly. Considering the current closing price of about 500 yuan, choosing call warrants that are roughly 10% out-of-the-money with a strike price around 550 yuan would be relatively appropriate.

If products with excessively large out-of-the-money levels are selected, there is a chance that market makers will face difficulties in pricing, leading to situations where no quotes are provided or prices fail to track the underlying asset. This is something investors need to be particularly mindful of. If the market lacks products with suitable maturities and close-to-the-money pricing, the safest approach is to wait for appropriate products before participating. When conducting short-term trading, selecting the wrong product—such as one with too short a maturity or an excessively large out-of-the-money level—can easily result in rapid time decay or insufficient liquidity, causing the product price to stagnate or fail to follow the movement of the underlying stock. The best way to avoid these issues is to refrain from entering the market until suitable products are available. Just as off-season watermelons may lack quality assurance, trading warrants follows the same logic: forcing a choice of unsuitable terms will ultimately only harm your own interests. Investors with any questions regarding product selection are welcome to discuss and research with us.

Huaneng Power International (00902.HK): Can the power sector stocks sustain their upward momentum?

Simon: Next, let's focus on the trend of Huaneng Power International (00902). After falling to a low of 5.25 yuan in early February this year, the stock gradually started moving in an upward oscillation pattern, with a more noticeable uptrend in recent days. Today (August 5), it closed at 6.15 yuan, bringing the stock price very close to the upper rail of the Bollinger Band, even breaking through this level during the session. Some investors are curious: from a technical standpoint, can this upward momentum continue, and how much upside potential remains?

Assuming Huaneng Power International continues to rise, the first resistance level would be around 6.36 yuan, and if broken, the next target would test 6.68 yuan. However, based on a summary of technical signals, sell signals currently hold a slight advantage, with nine sell signals versus five buy signals. In short, technical analysis leans toward caution, with more sell signals present. Investors optimistic about future prospects can refer to the aforementioned 6.36 yuan resistance level for planning purposes.

JD.com Group-SW (09618.HK): Stock repeatedly tests new lows; hedging strategies become a lifeline for holders

Simon: The trend of JD.com (09618) might disappoint many investors. Since peaking at 120 yuan in January this year, the stock price has been on a continuous decline, closing today (5th) at 96.95 yuan, already breaking below the lower Bollinger Band on the daily chart, showing no optimistic outlook.

Some investors are concerned about where the short-term support level lies amid the ongoing decline in share price. Data shows that JD.com’s short-term support is around 93.8 yuan, and if this level breaks, the next downside target would be 87.4 yuan. However, it’s worth noting that a summary of technical signals presents a “strong buy” conclusion, with buy signals dominating at 13, compared to five sell signals.

In the market, some investors are continuously using put warrants and bear certificates for hedging operations. For those holding JD.com shares, this is certainly a correct risk management strategy. Seeing the stock fall naturally affects one's mood, but rather than passively bearing the loss, it’s better to consider using bearish instruments to hedge the position. For instance, suppose an investor unfortunately purchased shares at the peak of 110 yuan and faced continuous declines afterward. In such cases, investing a relatively small amount in leveraged put warrants or bear certificates could offset some losses caused by the stock's drop. This demonstrates that, aside from being tools for directional speculation, warrants and bull/bear certificates can also serve an essential hedging function for stockholders, as exemplified by the investor’s actions described above.

5. Baidu Group-SW (09888.HK): Stock price stabilizes at 115 yuan, timing for adding positions yet to be observed

Simon: Baidu's (09888) stock price has also experienced adjustments, retreating from the previous high of 161 yuan, and closed today (5th) at 115.9 yuan, very close to the lower Bollinger Band on the daily chart. Investors are paying attention to whether, if the stock price can stabilize above 115 yuan, it would be a good time to add positions.

From a technical signal perspective, Baidu is also showing a 'strong buy' pattern, with a total of 13 buy signals and 5 sell signals, indicating a short-term bias towards bullishness. If investors want to look for opportunities to build positions at lower levels, they can refer to the support level around 109.8 yuan; if this level is broken, the next target will be around 95.6 yuan. Investors interested in Baidu can observe the stock price performance near 109.8 yuan or even 95.6 yuan before making deployment decisions.

6. Zijin Mining (02899.HK): Increased stock price volatility, 40-yuan level becomes the focus

Simon: Finally analyzing the trend of Zijin Mining (02899). The stock saw a pullback today, with a slight adjustment, closing at 40.86 yuan, retreating near the 40-yuan level. In previous days, the stock price had once tested the upper Bollinger Band, reflecting significant volatility. In fact, over the past five trading days, the stock's volatility range was about 15.5%, confirming its notable fluctuations.

Investors are concerned about whether the stock price will fall below 40 yuan and whether technical signals indicate the possibility of a sharp decline. Data shows that currently, Zijin Mining’s technical signals are mainly neutral, with similar numbers of buy and sell signals, plus several neutral signals, resulting in an overall conclusion leaning towards neutrality.

There are still investors holding call warrants who remain optimistic about future performance. A reminder here is that if investors have bought call warrants with an exercise price above 44 yuan, they need to pay extra attention. The first resistance level for Zijin Mining is around 44.1 yuan, and only by successfully breaking through this level does the stock have the potential to test 46 yuan. In other words, investors holding call warrants with an exercise price of 46 yuan or even 48 yuan must recognize that the stock price needs to surpass the important 44.1-yuan level first before it can reach the exercise price, which may take some time and cannot be easily achieved in the short term. Investors can use this as a reference.

That concludes today's analysis of Hong Kong stocks. Thank you all for tuning in. If you have any questions, feel free to leave comments for discussion. We will continue to explore these topics in our daily reviews. Thank you!

Reminder: This article does not constitute any investment advice.

This article is for reference only and does not constitute any investment advice. The market data, opinions, and analysis contained herein may change at any time without prior notice. We are not responsible for any loss or damage caused by reliance on the information in this article. Technical analysis only shows whether certain technical conditions are met; a comprehensive assessment of asset performance should combine other data and should not solely rely on this article to make trading decisions. Please note that past performance is not indicative of future results. Follow Jenny's insights on Hong Kong stock warrants for more professional analysis.

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