[BOC Guest] Hang Seng Index, Xiaomi, SMIC, Pop Mart, Zijin Mining, Li Ning, Midea - Post-market analysis on January 20

Simon: Niki, hello! So today (January 20), let's first talk about the situation in the Hong Kong stock market. As you've seen, the Hong Kong stock market has been pulling back over the past two days, and today (January 20) it continued to decline slightly. How is the sentiment and atmosphere among investors in the market?

BOC International Director Niki: In fact, from $Hang Seng Index (800000.HK)$

, you can see that today (January 20), it has already dropped to around 26,300 points. Everyone can also notice that after the index surged to 27,000 points, it fell back again in just a few days. Therefore, overall, the market isn't able to maintain continuous upward momentum. At the 27,000-point level, it still needs some time to consolidate. Regarding the previous upward movement, we believe it will need to stabilize around the 26,400-point level. If this position holds, that would be good. But if it doesn’t hold or if market conditions weaken further, the index might retreat to 25,800 points. People may ask how the 25,800-point level was determined—was it arbitrarily chosen? Actually, I suggest everyone visit our BOC International website, the URL is www.bocifp.com. On this website, there is an important section worth referencing: the Hang Seng Index Bull-Bear Certificate Street Position Distribution Chart.

We basically update this chart twice a day. The 25,800 points I mentioned earlier are actually the heavy accumulation area for Hang Seng Index bull contracts. Today (January 20), it has already touched the 26,400-point level where corresponding bull contracts have been called back. The next important level is 25,800 points, which is where the most open interest lies. Therefore, everyone should be cautious; today (January 20), it has already hit around 26,300 points. If the 26,000-point level does not hold, it could drop to 25,800 points, which is also the second key level of the heavy accumulation area for Hang Seng Index bull contracts—the first threshold has already been breached. Regarding bear contracts, as a side note, they are currently concentrated around 27,500 points with over 1,000 futures contracts there. So for now, when the Hang Seng Index falls back to 26,500 points, some support may appear, and this level might also require some time to consolidate. Because overall, the environment’s atmosphere is not particularly clear, and uncertainties related to interest rate hikes remain. So this round, you can refer to the range between 25,800 points and 27,500 points for investment positioning.

In terms of the index, over the past couple of days, we've seen investors mostly taking advantage of the market's downward trend to make their moves. Because after all, when the market falls from a high to a low position, people tend to buy bullish positions, betting on a market rebound. Over the past five trading days, nearly 50 million in funds flowed into Hang Seng Index (HSI) bull contracts. In the most recent trading day, about 20 million flowed into bearish positions, meaning that funds related to bear contracts are exiting. For now, the market remains in a tug-of-war state without showing a clear one-sided trend.

For example, with bull contracts, some more aggressive investors might choose HSI bull contract 68825, which has a stop-loss level at 26,250 points. Since it’s close to the stop-loss level, the leverage is relatively high. If you want a stop-loss level further away, around 26,000 points, you can consider bull contract 68835, with a stop-loss level at 26,095 points and leverage reaching about 50 times. As for bear contracts, you can refer to contract 56147, which has a stop-loss level at 26,850 points and leverage of approximately 60 times.

Simon: Returning to the previous topic, the distribution chart of HSI bull and bear contracts on BOCI Securities’ website is very clear, allowing you to see the distribution and statistics of street-level positions at different price levels. You can clearly understand the relevant information. The heavy accumulation zone for bull contracts mentioned earlier is around 25,800 points, which is very close to our current calculated support level. The short-term support level is currently around 25,900 points. So investors are quite smart; they have positioned a larger number of contracts just below the support level. Of course, this data is provided as a reference and can help give you another perspective to analyze the market. If you want the most accurate product distribution or the latest product information, as previously mentioned, you can visit BOCIFP.com to check the latest updates.

Simon: Next, let’s talk about individual stocks. First, we need to discuss Xiaomi Group (01810), a stock that has recently given investors both hope and disappointment. Today (the 20th), its share price dropped to a low of 35.6 yuan, and the stock has shown relative weakness over this period. In the warrant market, what is the attitude of investors?

BOC International Director Niki: That's right. Xiaomi's performance last year could be described as outstanding, starting from the twenties and reaching almost 60 yuan at its peak. However, since around October last year, the stock began to fall from its highs. It had touched a low of 36.62 yuan on November 20th last year, and today (20th), it has broken below that level, reaching as low as near 35 yuan. So, everyone is asking what happened to Xiaomi, and whether it is still a good time to invest. In the afternoon, news came out that two incidents involving Xiaomi Auto occurred on the same day, drawing renewed attention to the safety of Xiaomi Auto. Such news naturally affects Xiaomi's stock price.

But perhaps everyone forgot that last time when the stock price fell to 36.62 yuan, company management, including Lei Jun, and Xiaomi itself spent 200 million yuan on a buyback. However, this time, with the stock breaking below the support twice, the decline has indeed caught investors' attention and concern. Therefore, we’re seeing continued fund flows, with some investors who bought at around 30 yuan, saw it rise to over 60 yuan, and then watched it fall back to the 30s, starting to consider whether this might be an opportunity for long-term entry. But because the stock broke through the support level, there’s uncertainty, and confidence in a rebound is weak. When considering investing directly in the stock to bet on a rebound, concerns about risk may cause hesitation. At this point, investors could consider Xiaomi’s call warrants. For just a few hundred to a thousand yuan, they can bet on a stock rebound. If the stock stabilizes and rebounds from here, they can continue adding positions since the rebound could last. However, if the stock unfortunately continues to fall, the loss would only be a few hundred to a thousand yuan for the entry fee, much cheaper than investing in the stock outright. In fact, starting yesterday, there has been continuous inflow into Xiaomi’s bullish products. Some terms, like call warrants with a strike price above 55 yuan expiring in August or September this year, have already been purchased by investors. However, I recommend avoiding such deep out-of-the-money terms, as the risk will be higher if the stock continues to fall. Today (the 20th), I’d like to introduce Xiaomi call warrant 22709, which has a strike price of 48 yuan—not as deep out-of-the-money as 55 yuan—and a shorter term, expiring at the end of June this year, offering attractive leverage of around 7 times. Of course, some investors feel that Xiaomi has just started falling and might continue to drop, so they might consider using Xiaomi’s put warrants as a hedging tool. Xiaomi’s put warrant 22168 has a strike price of 32.18 yuan, expires at the end of June, and offers leverage of about 5 times.

Simon: From a short-term perspective, Xiaomi’s technical signal summary shows 'Strong Buy,' indicating a more optimistic view on Xiaomi's rebound. This is why, based on the CBBC fund flow data, we can see some investors slowly buying call warrants, providing some reference data. However, some might ask, for stocks like Xiaomi, BOC International has introduced many related products, and the data for these products changes daily according to market conditions. Is there any other way to get instant access to the latest terms besides going online?

BOCI Director Niki: If, like today (the 20th), the stock suddenly drops to a new yearly low and you want to get the terms instantly without spending time online entering details, the quickest way is to call us. Our hotline is the Warrant Hotline: 00+852 3988 690. After dialing, follow the prompts to speak with our customer service team. This method is very convenient and fast. Additionally, if you have specific needs—for instance, if you think Tencent might rebound today but don’t want to be too aggressive and prefer more stable terms—you can explain your requirements to our colleagues, and we’ll provide relevant terms and products for investors to consider. Feel free to reach out to us; our colleagues are friendly and approachable.

Simon: So now, during trading hours, if you have any inquiries or questions regarding products, feel free to call BOCI’s hotline and communicate with Niki and her team for clarification.

Simon: Next, let’s move to another individual stock. Today (the 20th), I’d like to say more about SMIC (00981). Its share price performance may disappoint some investors, having fallen close to the mid-line on the daily chart. What are the fund flows and investor sentiment like in the warrant market?

BOC International Director Niki: If you’ve been following SMIC (00981), you know that its overall performance last year was very impressive, with its gains and trends repeatedly hitting new highs. However, this year, its performance hasn’t been particularly weak nor exceptionally strong, with the past two days showing a pattern of consolidation after a high. The stock price had previously risen as high as 94 yuan before retreating to around 34 yuan. Actually, as mentioned earlier, the market will continue to support the development of the high-tech chip industry. Last year, companies like SMIC (981) and Huahong underwent internal and external mergers and acquisitions, continuously strengthening their overall production ecosystem. So, although the stock price has indeed been correcting recently, we can still see that investors are actively entering the market, buying call warrants and bull contracts to bet on a rebound of the underlying stock.

As mentioned in previous episodes, the leverage of call warrants for chip stocks like SMIC is around 2-4 times. However, recently, BOCI has received inquiries from investors looking for products with higher leverage, as the previous products were priced at two to three cents, offering only 2-3 times leverage, which wasn’t very attractive. Considering this, BOCI has introduced a new product—SMIC bull contract 65935, which you can find on our homepage. The most important aspect of bull and bear contracts is the stop-loss level, and this bull contract has a stop-loss level of 71.3 yuan, while SMIC’s current share price is around 74.6 yuan, leaving a buffer of about 3 yuan before hitting the stop-loss level. This means that if the underlying stock doesn’t fall to 71.3 yuan in the short term, this tool can be used to bet on a rebound. Moreover, its leverage is impressive, reaching around 15 times, and it expires in December this year. So, for investors who favor high leverage and want to bet on a rebound amid the recent consecutive declines, SMIC bull contract 65935 is worth considering.

Simon: Actually, BOC International offers a variety of products related to SMIC’s warrants and bull certificates for everyone to choose from. As Niki just mentioned, if anyone feels that the terms of products related to a certain underlying stock need further discussion with BOC International, they can call BOC International's team, who are always happy to listen to investors' feedback. For instance, if we find that the leverage of a warrant is less attractive than that of a bull certificate, we will also consider everyone’s opinions and study whether to launch relevant Bull/Bear products. We hope that BOC International can roll out more products for different individual stocks, meeting investors' diverse needs.

Simon: Next, let’s take a look at another stock and talk with Niki about Pop Mart (09992). We’ve discussed it quite a bit before. Recently, its share price has recovered somewhat—could it return to around the 200-yuan level? Are investors actively buying related call warrants again?

Niki, Director of BOC International: Pop Mart's share price has actually been sluggish for a while. Previously, the stock price was above 300 yuan, but later it fell below 200 yuan, hitting a low of over 170 yuan. Therefore, investors have been paying attention to this stock for a long time, waiting for an entry opportunity. Yesterday, there was good news: Pop Mart's management conducted their first buyback in two years, spending approximately 250 million yuan. This buyback can be seen as a positive sign from the management regarding the company’s future prospects, since it involves real money to support the stock price. Additionally, some popular IP products by Pop Mart, along with collaborations involving mobile products, are seeing new developments, with new products being introduced to the market. Overall, the market's expectations for Pop Mart are relatively positive. Although the broader Hong Kong stock market is showing a gradual downward trend, Pop Mart's stock performance has been eye-catching. Thus, upon seeing these positive signals, investors’ confidence in purchasing related products to bet on a rebound has increased. Whether buying CBBCs or Warrants, timing the entry point is crucial. If the likelihood of a stock rebounding outweighs the likelihood of it falling, then it’s a good entry point.

And today (the 20th), this situation occurred with Pop Mart. If you're considering Pop Mart's call warrants, you can refer to the warrant 23339, with a strike price of 240.12 yuan, expiring in May this year, and leverage is around 5 times. As for put warrants, currently, most investors seem to be betting on a rebound, so whether or not to allocate them can be decided later depending on how things develop.

Simon: To be honest, from a technical analysis perspective, the current state is 'neutral,' meaning there is no clear direction in the short term, so some investors may focus on call warrants while others may pay attention to put warrants. So, as I said before, if you want to keep up with the latest product information amid short-term market movements, you might frequently visit BOC International's website or call the Warrant hotline at 39886909 for the latest updates.

Simon: Next, let's talk about another sector — the resources sector, such as Zijin Mining (02899) and Jiangxi Copper (00358). What’s the sentiment among investors toward this sector recently?

Niki, Director at BOC International: Actually, since last year, everyone has already noticed the strong comeback of gold prices. We've occasionally reminded our audience on the show to keep an eye on gold prices and consider taking a positive view. Besides gold, prices of other precious metals like silver have also been at historical highs or continuously hitting multi-year records. In fact, some friends even asked me if I could help them buy a bar of silver from the bank because they said it’s hard to find in many parts of mainland China. Actually, holding physical bars of silver at home is possible, but metal products may face oxidation issues, which could bring some trouble. So instead of holding physical gold or silver, there are better ways, such as investing in related stocks or ETFs. These investment tools are more convenient to trade, and when you want to cash out, it’s much quicker without having to queue at the bank or worry about storage or oxidation. Therefore, you might consider using these instruments for investment. In terms of capital, an easier way to enter the market is by referring to the trend of gold prices. Today (the 20th), international gold prices have broken through 4700 yuan per gram, just as we previously expected that international gold prices would continue to rise gradually. Remember, when gold prices fell close to 4000 yuan per gram last year, I reminded everyone that it was a good entry point. Currently, gold prices still look promising.

So for Zijin Mining, you can also pay attention to its call warrants. By leveraging the effect of leverage, you can earn leveraged returns with relatively less capital, making it a good asset allocation choice. For example, Zijin Mining's call warrants can refer to the warrant 21590, with a strike price of 48.6 yuan, expiring in mid-April this year, and leverage is around 7 times.

Simon: Our regular listeners know that the gold-related sectors are often discussed on our program. If you sometimes forget the details, one quick way to catch up is by logging into the BOC International website. The homepage will feature daily focus stocks and key news, allowing you to quickly browse the current highlights and relevant information.

Simon: Next, let's discuss another sector — the domestic demand sector. On today’s homepage (the 20th), stocks like Li Ning (02331) and Midea (00300) were mentioned. Can you share the recent investment sentiment towards domestic demand stocks?

Niki, Director at BOC International: Since last year, people have been paying attention to policies like trade-ins and consumption subsidies in mainland China, and it’s believed that by 2026, this will still be one of the major market themes. Therefore, investors are advised to continue focusing on consumer stocks, especially well-known mainland brands, such as electronics brands, consumer goods brands, and food and beverage brands. You may notice that whether it’s market sentiment, companies' willingness to export, or manufacturers’ export preparations, the risks and costs of exporting have increased. Hence, it makes sense to shift focus to domestic demand, or what we’ve previously referred to as the internal cycle. When shopping in different provinces and cities within China, consumers tend to prefer local mainland brands. Overall, this trend will benefit well-known mainland consumer brands, including those mentioned earlier like Li Ning, Midea, and Mengniu (02319), all of which deserve close attention.

Here’s a reference product for consideration. For example, Li Ning’s call warrant 22219 has a strike price of 23.33 yuan, expiring around mid-May this year, with leverage approximately 6 times. Currently, Li Ning’s stock price is hovering in the twenties. If the price rises to around 23 yuan, this product will move from slightly out-of-the-money to in-the-money, amplifying the leverage effect. So if you’re optimistic about Li Ning’s future performance, this warrant is a good option.

As for Midea, there may be fewer opportunities to refer to related products, but BOC International does offer its warrants. Midea’s stock code is 00300, and the corresponding call warrant 21629 has a strike price of 108.98 yuan, which is about 25% higher than the current stock price. It expires around the end of July this year, with leverage between 5-6 times. This product’s price is around 0.20 yuan, offering relatively moderate entry costs. Products priced at two to three tenths may feel slightly expensive, but this one, priced at around 0.20 yuan, provides 5-6 times leverage with a reasonable time frame, so it’s worth considering.

Simon: Everyone can see that the stock price of 2331 has actually performed well, not just in the past day or two. Since hitting a low point around December last year, it has been on an upward trend. We often mentioned the domestic demand sector last year. If investors want to know more related information, they can visit BOC International's website to search for product information and the latest news. BOC International continues to launch new products for different stocks, whether bull/bear certificates or warrants, there are many new choices. So if investors sometimes want instant advice on whether there are suitable products for a particular stock, or explore the possibility of launching related products, they are welcome to call the warrant hotline 39886909 and communicate with Niki’s team to learn the latest product information.

That’s all for today’s (the 20th) sharing. Thank you very much for Niki’s time. Let’s meet again next week with Niki to discuss the latest market conditions. Bye for now, see you next time.

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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