Disappointment vs. Buyback Boost: Has Xiaomi's Stock Bottomed Out?

Recently, the share price of Xiaomi Group (01810.HK) entered a highly sensitive technical zone at the beginning of 2026 after months of adjustment. On one side, market sentiment remains weak with investors feeling 'disappointed'; on the other side, there is an intense wave of corporate buybacks and clear oversold rebound signals from some technical indicators. This collision between pessimistic reality and contrarian positioning expectations has made Xiaomi the focal point of current market divergence, creating unique opportunities and challenges for short-term trading.

Market View: Intersection of Disappointment and Bottom-Bounce Expectations

The market’s perspective on Xiaomi clearly splits into two narratives: the realistic question of 'Why the relentless decline?' versus the value probe of 'Could it have hit rock bottom?'

January 23rd [Hong Kong Stock Podcast] Hang Seng Index, Meituan, Trip.Com, Ganfeng Lithium, Zhaojin Mining, Xiaomi

Widespread disappointment has been the dominant emotional factor weighing on the stock price. In the January 23rd episode of [HK Stocks Podcast], host Simon pointed out the prevailing market sentiment: Xiaomi’s share price performance 'might feel somewhat disappointing to investors,' as its movement has lingered in the lower range for an extended period, significantly underperforming against the broader market. This perceived weakness stems from the prolonged consolidation following its drop from previous highs, leading to waning investor confidence.

However, contrarian positioning and bottom-fishing expectations are quietly gaining momentum. The same [Hong Kong Stock Podcast] noted that despite the weak stock performance, “in the warrant market, some have already started gradually buying Xiaomi’s call warrants.” This behavior of accumulating chips amid widespread pessimism reflects certain astute funds basing their decisions on technical analysis, believing the market may have become overly bearish. This view is strongly supported by the company’s own actions: on January 22nd, Xiaomi Group announced it would initiate an automatic share repurchase plan worth up to 2.5 billion yuan to demonstrate management's confidence in the company’s business outlook, considering it in the best interests of shareholders. Investment advisor Qu Fang from Wanlian Securities believes this move highlights the company’s advantages in stabilizing market confidence and maintaining robust cash flow.

The [Hong Kong Stock Podcast] also noted that on January 23rd, Xiaomi's stock price showed a slight uptick alongside increased trading volume, which was seen as a short-term positive signal. While some investors remain cautiously optimistic about a target of 50 yuan, or even hold call warrants with an exercise price of 60 yuan, host Simon offered a more pragmatic short-term assessment: given insufficient momentum for the stock to break above 50 yuan, the near-term bullish target should focus around 39 yuan.

Technical Analysis: Oversold Signals Emerge, Key Levels Determine Short-Term Direction

As of January 26th, Xiaomi’s stock price hovered around 35 yuan, with mixed bullish and bearish signals on the technical charts. However, signs of oversold conditions were prominent, indicating potential for a reversal.

Key support levels serve as a litmus test for whether the stock has 'bottomed out.' Currently, the first important line of defense lies near 34.3 yuan. A breach here could lead the market to further test the second support level at 32.1 yuan, which is both a psychological and technical key point over the longer term. At present, multiple oscillation indicators have issued clear warnings: the Williams %R and Stochastic Oscillator are both in 'oversold territory,' while the Momentum Oscillator even shows a 'bottom divergence' signal, typically a forward-looking technical indicator suggesting exhaustion of downward momentum and possible formation of a short-term bottom.

Resistance levels above will be crucial in testing the quality of any rebound. The first short-term rebound target and resistance level lie at 37.3 yuan. If the stock can effectively break through this level with strong trading volumes, it may challenge the stronger resistance zone at 39.7 yuan, where multiple medium- to long-term moving averages converge, serving as a watershed for determining whether a technical rebound could evolve into a trend reversal. As mentioned in [Hong Kong Stock Podcast], investors should “gradually confirm the trend”; if the stock breaks above 38 yuan, the next target could be set around 39.3 yuan.

Review of Warrants and Bull/Bear Contracts: A Direct Reflection of Leverage Efficiency

Looking back at recent performances in the derivatives market, it is evident that when direction is clear, derivative instruments significantly enhance capital efficiency. For instance, regarding products mentioned on January 21st, over the following two trading days, Xiaomi’s underlying stock rose by 2.32%. Meanwhile, the gains of bullish derivatives were amplified by leverage: BNP Paribas Call Warrant (13204) surged 10%, Societe Generale Bull Certificate (68092), and UBS Group Bull Certificates rose 31% and 28%, respectively. This clearly demonstrates that when investors correctly predict the underlying stock's direction, related derivatives can provide returns far exceeding those of the underlying stock due to their leveraged nature. Of course, this characteristic works both ways, amplifying losses when predictions go wrong.

In-depth Analysis of Current Warrants and Bull/Bear Certificate Terms

In the current complex situation of 'upside resistance, downside support, and technical oversold conditions,' selecting derivatives requires closely aligning product terms with key technical levels. Special attention should be paid to the core recommendations repeatedly emphasized in the [Hong Kong Stock Podcast].

Bullish direction choices (betting on an oversold rebound and effective support):

* Bull certificates (high leverage but beware of forced recall risks): For instance, the currently recommended HSBC bull certificate (55191) and UBS Group bull certificate (67935), both with a recall price set at $34. This setting is highly strategic—it’s slightly below the first support level of $34.3. This means that the product offers some buffer for stock prices oscillating near the first support level, but the safety margin is very thin. If the stock price breaks below $34.3 effectively, the product will face the risk of being forcibly recalled. The leverage of up to approximately 17 times is attractive, but it’s only suitable for investors with strong confidence in the $34.3 support and who anticipate a rapid rebound in stock price.

* Call warrants (no forced recall risk, but need to monitor 'out-of-the-money degree'): For example, Bank of China call warrant (13186) and BNP Paribas call warrant (13204), both with an exercise price of $37.15. This represents a mildly out-of-the-money term design. The exercise price is slightly below the first resistance level of $37.3, aiming to capture the stock price rebound near the resistance level. This aligns perfectly with the view in the [Hong Kong Stock Podcast] that 'overly out-of-the-money products with an exercise price above $40 should be avoided.' Such mildly out-of-the-money or near-the-money products have more reasonable requirements for underlying stock increases, better linkage, and can effectively avoid the high risk of deep out-of-the-money products not tracking prices or even falling due to time value decay during sideways trading.

Bearish direction choices (betting on a failed rebound or support breakdown):

* Bear certificates (providing safer margins for bearish tools): For instance, UBS Group bear certificate (69732) and Societe Generale bear certificate (68563), both with a recall price of $40. This level is far above the second resistance level of $39.7, providing ample safety buffer, and the risk of being forcibly recalled in the short term is low. Suitable for investors who believe the stock price rebound is weak and will drop again below the key resistance level.

* Put warrants (targeting below key support): For example, UBS Group put warrant (22136) and J.P. Morgan put warrant (22407), both with an exercise price of $35.16. This exercise price is slightly higher than the first support level of $34.3. Its design intention is to bet on a weak stock price rebound and a subsequent fall back to around or below the support level.

Interaction and Questions

Quick Q&A:

1. Do you think Xiaomi Group's stock price, under the influence of buybacks and oversold signals, can successfully hold the support at $34.3 and rebound? Yes / No / Continue consolidating

2. If you want to trade Xiaomi derivatives at the current level, would you prefer to choose bull certificates/mildly out-of-the-money call warrants to bet on a rebound, or bear certificates/put warrants to hedge against a decline?

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