[HKEX Podcast] Hang Seng Index, HKEX, Yanzhou Energy, AIA, China Mobile, Alibaba - Post-market analysis on January 7

Some bullish investors continue to be optimistic about the index reaching 27,000 points and are still holding bull contracts with a stop-loss level at 25,854 points. Bearish investors believe that the small rebound has ended and expect a drop of 300-400 points, holding bear contracts with a stop-loss level at 27,300 points.

Simon: Hello everyone! Today we will continue to review the situation of Hong Kong stocks. Remember, today's stock market—first looking at the Hang Seng Index—it has retreated somewhat. This means that after reaching a high point yesterday, there has been some adjustment today. As mentioned in the past two days, particularly regarding short-term technical signals, we noted more sell signals. Sometimes, these technical signal summaries can provide useful references. Of course, we’re not saying that the moment we talk about it today, the corresponding trend will appear tomorrow. However, if some short-term signals are indeed strongly positive or negative, we will give feedback so you have more information for reference.

Alright, let’s first take a look at investors' views. The optimistic ones believe that the index may rise to 27,000 points. If it indeed reaches 27,000 points, it might even surpass previous highs. They have also been buying bull contracts. However, some bearish investors think this minor rebound is coming to an end and expect a further decline. Of course, it's normal for the market to have both bullish and bearish views, as I always say. A healthy market should have both perspectives; being too one-sided isn’t necessarily a good thing.

Alright, let’s take a look. Regarding the current summary of technical signals, there are still more sell signals—10 sell signals and 5 buy signals. Therefore, in the short term, the market outlook may not be very optimistic. Investors who are optimistic about the index reaching 27,000 points may need to break through the first resistance level first. The first resistance level is around 26,800 points. If it breaks through 26,800 points, then there is indeed a chance to rise to 27,000 points or even higher levels. Reviewing the data, 26,800 points was roughly yesterday’s high, which can serve as a reference.

On the other hand, if there really is a decline, investors think it might fall by 300-400 points, roughly down to around 26,000 points. If looking at support levels, it might go even lower, with support around 25,800 points. If it breaks below that, it could potentially drop to 25,300 points. These figures can serve as a reference for everyone.

2. Hong Kong Exchange (00388.HK): The trend seems strong, but will it have a chance to challenge 440 HKD? In the warrant market, call warrants with a strike price of 488.2 HKD are being held.

Simon: Hong Kong Exchange (0388) performed pretty well today (7th), unlike the Hang Seng Index. Today’s movement was relatively stronger. You can see it staying at a high position; of course, stock prices fluctuate, but at least the closing price for now stands above the top of the Bollinger Band, firmly positioned around 430.

Investors remain generally optimistic about the Hong Kong Exchange (0388). If looking at resistance levels, 440 HKD might still need some time, as the current short-term resistance is around 438 HKD. If it can break through 438 HKD, there indeed might be a chance to reach 440 HKD. So today, the key is whether it can break through 438 HKD. But one thing to note is that, from a technical signal perspective, 'sell' signals are currently dominant, with 11 sell signals and 6 buy signals. Therefore, the short-term trend for the Hong Kong Exchange might be slightly bearish, which investors should keep in mind.

If you really want to participate in warrant trading, for Hong Kong Exchange, it’s better to choose products closer to the current price. Of course, if you select products with higher exercise prices, like above 480, the out-of-the-money percentage would be large, around 13%. Although the leverage is quite high, reaching over 8x, approaching 9x, for products with exercise prices around 463-464 (out-of-the-money by about 8%), they offer competitive advantages with leverage exceeding 9x and premiums around 11%, with low implied volatility, making them more cost-effective.

Avoid choosing products that are too far out-of-the-money because call warrants (call wheels) experience time decay, and if the direction is wrong, losses could be greater. Moreover, if you buy out-of-the-money call warrants and the stock price falls, not only will the warrant price drop, but the degree of being out-of-the-money will increase, leading to even larger losses. So we hope investors take note and try to choose products that are closer to being at-the-money. If the market supply allows, in-the-money products can also be considered since they tend to have better resilience against declines.

3. Yanzhou Energy (01171.HK): The trend is showing a strong breakout, is the resistance at HKD 11 significant?

Simon: Today’s (7th) stock price movement of Yanzhou Energy is quite ideal, with a large bullish candlestick forming and trading volume also supporting the move. Compared to yesterday or the day before, trading volume hit new highs again. However, it's worth noting that the RSI indicator has reached a relatively high level, around 85.9, which everyone should be mindful of. Investors are asking whether Yanzhou Energy can continue this momentum and break through the HKD 11 mark. In terms of short-term resistance levels, Yanzhou Energy’s resistance is approximately at HKD 11.2. If it breaks through HKD 11.2, it could rise to HKD 11.5. So, to briefly answer investors' questions, in the short term, Yanzhou Energy has a chance to break through HKD 11. However, from a technical signal perspective, the current outlook is neutral without a clear direction. This is provided for your reference.

4. AIA (01299.HK): Investors are asking if the stock price can reach HKD 90. They hold call warrants at a strike price of HKD 91.71.

Simon: Looking at AIA’s (1299) stock price today, there isn’t much significant change; it continues to consolidate at a high level. Of course, based on the final closing price, there was a slight decline, but the drop wasn't particularly notable. To some extent, it maintains a sideways consolidation pattern. Some investors are asking if AIA has the potential to rise to HKD 90. Let’s look at this from two perspectives. In terms of resistance, the current resistance is about HKD 89.1. If it can break through that, there’s a chance it could rise above HKD 90, even reaching HKD 92.4. Therefore, whether it can rise to HKD 90 depends first on whether it can break through the HKD 89.1 resistance level. Many investors have purchased some call warrants with strike prices around HKD 91, which is an appropriate out-of-the-money range. With strike prices near HKD 91 or HKD 92, the current out-of-the-money percentage is roughly 6%, so these aren’t overly out-of-the-money products. There are quite a few choices within this out-of-the-money range. However, it’s important to note that some products may have slightly higher leverage, up to around 4.9 times, and implied volatility should also be considered. Both implied volatility and premium are essential factors. Some products have relatively lower premiums and implied volatilities. While the differences between products might be less than 10%, from an investor’s perspective, choosing products with higher leverage, and relatively lower implied volatility and premium, will be more advantageous. Still, one important reminder: currently, AIA’s technical signals lean toward 'sell,' with sell signals dominating. This is shared for investors’ reference.

5. China Mobile (00941.HK): Investors are asking where the support level is. In the warrant market, some investors have taken bullish certificates with a stop-loss at HKD 74.5.

Simon: Recall that China Mobile’s stock price had relatively larger fluctuations today. Based on the current closing price, it’s around HKD 81.3. Although the increase or decrease isn’t very large, we can see that its daily volatility is actually quite substantial. Additionally, amid today’s market decline, China Mobile’s trading volume increased. It has fallen for three consecutive days, with trading volume rising for three consecutive days as well—this data is worth noting. Investors are also asking where China Mobile’s current support level lies. At present, the support level is approximately HKD 78.2; if it breaks below HKD 78.2, the next possible drop could be to HKD 74.9, something to watch out for.

I’ve noticed some investors considering buying bullish certificates, with their chosen stop-loss around HKD 74.5. While the previously calculated support level was approximately HKD 74.9, investors’ judgment is quite accurate, though I think this choice is somewhat risky—it’s too close to the price. If possible, it would be better to choose products with a further stop-loss. Products with a further stop-loss can still offer leverage of about 10 times. Of course, products closer to the price will have higher leverage, potentially reaching 12x, 13x, or even 14x, but if you want to play it safer, products with around 10x leverage are a viable option. Losing all principal due to being stopped out progressively might not be the best scenario. One data point for reference: from a signal summary perspective, China Mobile (0941) is still dominated by 'buy' signals. Thus, the decision to buy bullish certificates does have data backing it; it’s just that product selection requires careful consideration.

6. Alibaba-W (09988.HK): Will it fall back to HKD 140? In the warrant market, investors hold bullish certificates with a stop-loss at HKD 140.

Simon: I believe many people are paying attention to such large-cap stocks. We can see that Alibaba fell significantly today, and trading volume expanded alongside the market decline—these figures can serve as a reference. In terms of support levels, it’s roughly at HKD 142. If it breaks below that, there’s a chance it could fall below HKD 140, potentially reaching HKD 137.8. Some investors are also purchasing bullish certificates with a stop-loss around HKD 140. Frankly speaking, a stop-loss at HKD 140 is still a bit too close to the price. Given the current support level and market points, breaking below HKD 140 is indeed possible. Therefore, if you want to play it safer, you could opt for products with a stop-loss at HKD 138 or even lower—there are suitable options. For example, products with a stop-loss around HKD 135 can still offer leverage of about 10 times. When selecting products, although Alibaba’s current technical signal summary leans toward 'buy,' risk management should still be considered. Choosing products with stop-losses too close to the price often entails greater risk of being stopped out. Hence, it’s recommended that investors, when choosing products, consider not only leverage but also try to avoid known support or resistance levels. This way, we hope to minimize the risk of being stopped out.

Alright, that concludes today’s sharing. Thank you all for listening. If you have any questions about specific stocks, feel free to leave us a message, and we’ll answer them for you. Thanks, everyone, goodbye!

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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