[HKEX Podcast] Hang Seng Index, Kuaishou, Wuxi Apptec, AIA, Xiaomi Group, Tencent - Post-market analysis on January 5th

Simon: Hello everyone, I'm back again to take a look at the latest situation in the Hong Kong stock market. It's been a while since I last discussed the market with you, mainly because I was on a business trip and then wasn't feeling well, so I took some time off. Now I'm back and finally able to chat with you about the Hong Kong stock market.

1、 $Hang Seng Index (800000.HK)$

Bullish investors believe that 26,300 can be defended and are holding bullish warrants with a stop-loss level at 25,000. Bearish investors indicated they are bearish in the long term towards the 25,000-point level and are holding bearish warrants with a stop-loss level at 27,000.

Simon: As you can see, after entering the new year, last Friday’s rally in the Hong Kong stock market was quite impressive, like a big upward surge. You could say that last Friday the Hong Kong stocks broke through the top of the Bollinger Bands, which certainly made many investors quite happy.

As for today’s (January 5th) performance, if we calculate based on the closing price, there was still a slight increase overall. However, to be honest, the gains were not particularly large or ideal, and may leave investors feeling somewhat disappointed. In terms of percentage gains, it really wasn’t much, so I believe many investors would feel let down. Another point worth noting is that although today's Hong Kong stock market could be described as relatively stable without major fluctuations, trading volume actually increased compared to previous periods. Typically, if trading volume rises, one hopes the market moves upwards accordingly, which would be ideal. But as happened today, the market remained sluggish and even dipped slightly, which isn't necessarily the most ideal scenario.

However, investor opinions have always been divided: some are bullish while others are bearish. Bullish investors believe that around the current closing price, near 26,300 points, it should hold steady, so they continue buying bullish warrants. On the other hand, bearish investors think Hong Kong stocks could fall to 25,000 points, but even if they buy bearish warrants, they prefer relatively safer ones.

Before diving into specific products, let's first review the summary of technical signals. In the short term, whether looking at trends or technical analysis charts, it’s evident that the Hang Seng Index has indeed reached the top of the Bollinger Bands on the daily chart. Based on today’s closing price, it has slightly deviated above the upper band. Looking at specific technical signals, in summary, there are temporarily nine sell signals and four buy signals. Simply put, “sell” signals are dominant. Therefore, whether considering the position at the top of the Bollinger Bands or referring to various technical indicators, the current technical signals suggest more selling pressure, which can serve as a reference point for everyone.

If we judge based on these signal summaries, in the short term, the support level is approximately around 25,800 points. If it breaks below 25,800, it might drop further to around 25,500 points, which serves as a reference point. Regarding resistance levels, for those investors who remain optimistic about the market and wonder if it can rise further, the first resistance level is roughly at 26,400 points, which is relatively close to today's closing price. Given today's narrow volatility range, the calculated support and resistance levels are relatively close. If it does break through 26,400, everyone will likely be pleased, and it could potentially rise to 27,100 points.

Therefore, if there are still investors in the market who are bullish and want to continue holding bullish warrants but are concerned about short-term pullback risks, buying bullish warrants with stop-loss levels below 25,500 points would be relatively safer. I recall some investors even purchase bullish warrants with stop-loss levels around 25,000 points, which provides greater peace of mind and safety. These types of bullish warrants generally offer significant leverage, sometimes approaching 20 times, with lower stop-loss risks and less likelihood of hitting the stop-loss level.

In fact, for products below 25,500 points in the market, some have leverage ratios as high as 25 times, while others are slightly above 22 times, approaching 23 times. If investors buy bull contracts around 25,100 or 25,000 points, as some believe, the leverage can reach about 20 times, which also reduces the risk of forced recall. This is a viable option, and there are indeed such products on the market with leverage close to 20 times and recall prices around 25,000 or 25,100 points. Therefore, when choosing bull contracts, around 25,000 points is also a reasonable choice.

On the other hand, if looking at bear contracts, some investors may choose to buy bear contracts around 27,000 points. As mentioned earlier, the Hong Kong stock market could rise to 27,100 points, so based on this analysis, buying bear contract products around 27,200 or 27,300 points would be an appropriate choice. Currently, for products related to 27,300 points, their leverage ratios are not low, approximately between 23 to 24 times, though specifics depend on the selected product.

However, it’s worth noting that some products with farther recall prices also offer relatively high leverage. For example, products with recall prices at 27,350 points can maintain a leverage ratio of around 24 times, which is relatively high among similar products. Investors should take note of this. There are different choices available in the market, and comparing various product terms might be useful. Of course, referring to the second support or resistance level is one method, but having personal judgment is also beneficial. Once we’ve identified our target price, the next step is to see what corresponding products are available in the market. Whether considering pricing, implied volatility, or the distance to the recall price for bull and bear contracts, and then comparing leverage ratios, the market's products remain fairly competitive. Sometimes, products closer to the current price may have higher leverage, which is understandable. But I want to emphasize that products with farther recall prices can also offer attractive leverage, which investors should pay attention to.

Next, let’s look at individual stocks. The overall market today has been relatively quiet, not as exciting as last Friday. It remains to be seen whether individual stocks will bring any surprises.

2、 $KUAISHOU-W (01024.HK)$ Investors ask how much more room there is for upward movement? In the warrant market, investors say they will consider re-entering at 60 yuan; currently, they are fully short (Put).

Simon: The first stock I’d like to talk about is Kuaishou (01024). Kuaishou’s share price performance today (on the 5th) was quite remarkable. In fact, its share price rose significantly last Friday, and today it gained even more attention. Besides the strong price increase, the closing price was 73.6 yuan, and today’s trading volume marked a significant breakthrough compared to the past three months, which is worth noting. Regarding the share price, as previously mentioned, calculated from today’s closing price, it has already deviated from the top of the Bollinger Bands. Additionally, the RSI indicator is also high, reaching 82.

Some investors may ask how much more upside potential Kuaishou has, as it surged sharply today. Reviewing the technical signals, the overall trend still shows more sell signals. On one hand, the share price has deviated from the upper limit of the Bollinger Bands; on the other hand, the pressure is also relatively high. Simply put, there are currently 8 sell signals and 5 buy signals, indicating a dominant sell sentiment. So if asked about Kuaishou's short-term direct betting rate, it may not be very high. Of course, if some investors think it might rally again before a correction, I’ll provide a resistance level for reference, which is at 81.4 yuan.

In the warrant market, investors appear relatively calm. Seeing how much Kuaishou has risen today, they may choose to wait for a pullback before making decisions. For now, some investors are mainly buying put warrants (put wheels). Actually, in the warrant market, when the underlying stock rises to a certain extent, investors often adopt a contrarian approach. That means, given Kuaishou’s sharp rise today, investors who bought the stock directly might wonder if it will continue to rise, by how much, and whether to chase it now, but warrant market investors, on the other hand, may think that after such a significant rise, whether due to technical adjustments or natural price corrections, a pullback is possible, so they may pre-emptively position themselves with put warrants or short-selling products. This is common investor behavior when participating in warrant or bull/bear contract trading.

Also worth noting is that although some investors may be bearish, since warrants or bull/bear contracts inherently carry leverage, investors might not commit all their capital. They may only use a small portion of their funds, and thanks to the leverage characteristics of these products, they can still achieve decent returns. Therefore, sometimes we observe that even in a rising market, capital flows into short-selling products. Some investors choose to short during a bull market for this reason—using a small amount of capital combined with leverage to achieve good returns.

3. Wuxi AppTec (02359.HK): The trend has broken through the peak; what’s the next target?

Simon: Next, let's look at the second stock, 2359 Wuxi Apptec. As a pharmaceutical stock, Wuxi Apptec performed well today, with an overall upward trend. However, today (the 5th), it surged close to the upper band of the Bollinger Bands, then retreated to close at 104.2 yuan. Today’s trading volume was relatively high; although not particularly outstanding compared to mid-December or late November, it is considered higher compared to previous days. The stock price rose along with the trading volume, and despite retreating from its high point, it still recorded gains overall. Investors asked: If we continue to be bullish on Wuxi Apptec, what would be the next target price?

If Wuxi Apptec continues to rise, the resistance level would be around 108.2 yuan. If it breaks through 108.2 yuan, it may rise to about 112.3 yuan, answering the investors' question. However, summarizing from the technical signals, the outlook is currently neutral, without a clear direction for buying or selling, so ultimately, investors need to make their own judgment. Everyone has different risk tolerance levels and interpretations of individual stocks; I am just objectively stating some data for your reference.

4. AIA (01299.HK): Can the stock price break through 90 yuan? In the warrant market, investors are holding call warrants with an exercise price of 91 yuan.

Simon: Let's move on to the next stock, 1299 AIA. Relatively speaking, AIA’s share price today (the 5th) definitely saw gains, closing at 89.9 yuan, which is higher than last Friday. The trading volume also increased, but compared to the earlier mentioned 1024 Kuaishou, its performance wasn’t as impressive. AIA’s share price has always been relatively stable, and in previous trading sessions, it once fell near the middle line of the Bollinger Bands, but rebounded after finding support, recording a small gain today.

Investors are asking whether the stock price could potentially break through 90 yuan. In the warrant market, some investors remain bullish on AIA, believing there is still room for growth. I’m purely stating the data objectively, without intending to dampen spirits. Summarizing from the technical signals, there is a temporary dominance of sell signals, with 8 sell signals versus 6 buy signals, giving a slight edge to selling, which is provided here for your reference.

As for whether the stock price can break through 90 yuan, it may depend on whether it can surpass the resistance level at 85 yuan. If it breaks through 85 yuan, there is indeed a chance it could rise to 90.4 yuan. Of course, subjectively, I hope every stock rises and every investor makes money, but the technical signal summary indicates that selling is dominant right now, and I must objectively inform everyone.

5. Xiaomi Group-W (01810.HK): The resistance at 40 yuan is significant; where is the support? Investors are looking at 35-38 yuan while holding bear certificates with a stop-loss level of 45 yuan.

Simon: Next, let's look at 1810 Xiaomi. Relative to the market conditions today (the 5th), Xiaomi disappointed many investors. Xiaomi's share price has been volatile recently, stuck in a sideways pattern. Today, the stock price ultimately fell, while trading volume increased, which is not a good sign. Although Xiaomi’s share price did rise after falling earlier, the upward momentum couldn't sustain itself, and the closing price returned to around 39.3 yuan. Some investors believe the resistance at 40 yuan is strong, which isn’t unreasonable since the stock price has repeatedly fallen back after reaching around 40 yuan during this period.

Investors are also asking about the support level. In the short term, the support level is approximately 38.4 yuan; if it breaks below that, it will test 35.8 yuan, which you can take as a reference. The 38.4 yuan level is already close to the bottom of the Bollinger Bands. However, summarizing from the technical signals, there is a slightly positive indication—currently, there are 10 buy signals and 5 sell signals, meaning the “buy” signals have a slight edge. Therefore, from a technical analysis perspective, there are more positive signals in the short term than negative ones, according to the technical signal calculations.

6. Tencent (00700.HK): What is the short-term resistance? In the warrant market, investors believe the rounded top has formed and are reversing to sell, holding bear certificates with a stop-loss level of 640 yuan.

Simon: Lastly, let's talk about another stock that gets a lot of attention, Tencent (700). Tencent's share price continued to rise slightly today (5th). Compared to other stocks we've mentioned, the increase wasn’t particularly significant, but it was still an uptick, and trading volume supported the rise as well. It's worth noting that the RSI indicator is starting to get a bit high, reaching 71, which I’ll mention for your reference.

Some investors may worry about where the short-term resistance level is and whether there will be a pullback after a certain rise. In the warrant market, some investors have started to deploy products betting on a downward trend. In the short term, Tencent's resistance level is around HKD 629. If it breaks above that, it could potentially rise to HKD 657, which is provided for your reference.

As for the summary of technical signals, Tencent is currently in a “neutral” state with no clear direction. Therefore, when the technical signal is neutral, whether you're bullish or bearish, don't be too aggressive — this is something to keep in mind.

Of course, there are various analytical methods and tools in the market, all aiming to provide different references. Ultimately, everyone still needs to make their own judgments and decisions based on their risk tolerance.

That’s all for today. If you have any questions about individual stocks or warrants, feel free to leave us a message. Next time, we’ll share insights on other stocks. See you!

Disclaimer: 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 shall not be liable for any loss or damage arising from reliance on the information in this article. Technical analysis merely indicates whether certain technical conditions are met; a comprehensive evaluation of asset performance should incorporate additional data. Trading decisions should not be based solely on the content of this article. Please note that past performance is not indicative of future results.

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