[BOC Guest] Hang Seng Index, Zijin Mining, Zijin Gold International, Huahong Semiconductor, Alibaba - Post-market Analysis on January 28

Simon: Hello Niki. The timing for today's live broadcast with you is quite appropriate because, look, $Hang Seng Index (800000.HK)$

In terms of the market, wow, today (January 28) really set some records. I saw a very eye-catching headline on BOC International’s website stating that it hit a 4-year high. Everyone must be very happy and hoping it continues to rise further. Perhaps we can see more gains too. Or let's take a look at today’s market conditions where the Hang Seng Index hit a 4-year high; you must be very busy. What are investors’ views on the current investment situation or their attitude towards Hang Seng Index investments?

Niki, Director of BOC International: The timing today is really excellent as we have caught a good moment to share the stock market situation with everyone. It has indeed risen to a 4-year high, surpassing 27,700 points. Overall, the market was extremely hot right from the opening today. My traders were all shouting, 'Wow, implied volatility!' Regardless of whether it’s the index or key leading stocks within individual equities, their related implied volatilities surged today. So if anyone bought some well-positioned call warrants products in the past few days, today they would profit both from price appreciation and implied volatility. What does this mean? If you bet on an upward trend and the market actually rises, that's one part of the profit; another part is due to increased market volatility which expands overall market fluctuations, thus significantly increasing the implied volatility of related warrants. Therefore, investors today should be making profits both from stock prices and volatility, truly comfortable and happy.

However, regarding the index, I noticed the market has risen for six consecutive trading days, quickly breaking through the four-year high and approaching the vicinity of 28,000 points. We used to talk about 27,000 points, then 26,000 points, and now we’re discussing 28,000 points. So, over the past week’s five trading days, investors’ deployment shows funds flowing out of long positions to take profits while simultaneously flowing into short positions of the Hang Seng Index. The amounts are similar, with approximately 120 million HKD flowing out from long positions to take profits and around 100 million HKD flowing into short positions.

However, I suggest that under the current market conditions, many investors who entered short positions these two or three days think the market might slow down a bit, so they're betting on shorts. That’s their thinking, but actually, warrant bull/bear certificates are short-term investment tools. I recommend that in this rising market, go with the flow—meaning continue buying products aligned with the broader market direction, moving upwards along with the trend, rather than guessing when the peak will occur. So even if you want to bet on a market pullback, I don’t recommend choosing Hang Seng Index bear certificates with recovery prices too close. For instance, with the market at 27,700 points now, selecting bear certificates with a 28,000-point recovery seems a bit too near, and some aggressive investors may choose even closer ones, only about 100 points away from recovery. Thus, I wouldn’t advise selecting products with recovery prices too close. Of course, for short-term speculation held for 1-2 days, it might work, but holding for 1-2 days isn't suitable for overly aggressive bear certificates.

For example, regarding Hang Seng Index bull certificate products, today investors refer to products with recovery terms around 26,700 points. Some people might ask why not introduce some closer-to-price options like those around 27,500 points? Because the rally was too rapid, our products haven't caught up yet, so our latest batch of new bull certificates generally have recovery prices around 26,700 points. Regarding put warrants, those who prefer closer recovery prices might opt for 27,700 or 27,800 points; if looking to hold longer, I suggest choosing higher recovery prices. Our website updates may lag sometimes when the market surges quickly, but that doesn't mean we lack such products—we have four to five hundred available, covering a wide range. So feel free to visit our company website.www.bocifp.comFor example, when searching for bull and bear certificates or call and put warrants on the Hang Seng Index, just choose products with strike prices that suit your needs – there are plenty of options available.

Simon: Niki mentioned a few things earlier. First, like today, if investors pick the right direction, they'll experience the happiest scenario – profiting from both the rise in implied volatility and the increase in warrant prices, as related warrants will follow the upward trend. If you’ve bought call warrants, they’ll also rise accordingly, which is excellent. Second, an important point Niki mentioned was seeing capital flow into bearish products. It’s perfectly fine for every investor to have their own views, but when selecting products, I hope everyone chooses ones that aren’t too close to the current price. Since the market may continue to rise, choosing products too close to the current price could easily lead to forced redemption risks. Therefore, while it's great to profit from a rising market, if you want to take a contrarian position, you should be more cautious about the product's forced redemption price or terms. In fact, the market changes so fast; checking websites is important, but sometimes making a phone call might be quicker. Niki, can you repeat the hotline number?

Niki, Director at BOC International: Sure! Because the market moves so quickly, sometimes people urgently need the number but can’t find it. You must remember this number: Warrant Hotline: 00+852 3988 6909. Call our customer service department, and my colleagues and I will help recommend products suitable for the current market based on your investment approach. For instance, if you say you want the closest-to-the-money product and don't mind a 100-point difference in the strike price as long as it's quick, we’ll recommend a few options. In fact, we currently have several products with strike prices within 50 points. You can utilize this service to resolve issues finding products or consult whether a product suits you, such as “I’m considering this one, is it appropriate?” Feel free to ask us first.

Simon: Anyway, if you have any questions about investing in warrants or bull and bear certificates, feel free to call BOC International's Warrant Hotline at 39886909 anytime to communicate with Niki's team.

Simon: Actually, as Niki mentioned earlier, today is a good time to share insights on the stock market situation. And not just today, I've noticed several sectors and industries gradually rising since we started doing shows with Niki, who seems to bring a bullish market effect. I hope listeners can earn more while following our program. One stock I’d like to discuss with Niki is Zijin Mining (02899). Gold prices continue to hit new highs, and today 2899 maintained its upward trend with significantly increased trading volume. I’d like to ask, what’s the sentiment among investors in the warrant market regarding 2899 or other related stocks recently?

Niki, Director at BOC International: The rise in Zijin Mining has been very significant. At the beginning of this year, it was around 37-38 yuan, and now it’s near 45 yuan. In fact, we’ve been reminding everyone since last year’s show to pay attention to gold, silver, precious metals, and commodity portfolios. I believe our audience has heard this advice and many have participated. I remember emphasizing last week’s show that external uncertainties remain high. As a result, international investors increasingly value tangible investments, putting funds into assets like gold, copper, and silver. Hence, international gold prices have risen sharply this year, reaching 5,200 yuan today. Within less than a month since the start of the year, prices have already increased by over 20%. Market reactions are swift, and China's market prices reflect growing attention and participation, whether in physical gold trading, stocks, or ETF investments, all of which are highly active.

Personally, I believe gold prices will continue to rise this year, sustaining this uptrend. Although prices have already increased by 20% this year, I expect the trend to persist. There are several reasons: First, central banks' trust in the US dollar is gradually decreasing, leading to more allocations towards gold. Currently, the average gold holding level is only around 7%, slightly higher in the US and around 7-8% domestically. If global central banks increase their gold holdings to 10%, it would greatly support international gold prices. Second, the US dollar remains weak, and since many precious metal prices are settled in dollars, a weaker dollar increases the relative value of physical gold or commodities. Third, gold production cannot be easily increased. Mining requires 5-10 years, and with demand rising while supply can't keep pace, prices will be pushed higher. So during this cycle, investors should actively consider deploying capital into gold-related assets.

You can keep an eye on 2899 (Zijin Mining), Shandong Gold (1787), or internationally gold-related stocks like 2840. BOC International has issued related asset warrants. For example, for 2899, we have a call warrant 21590 with a strike price of 48.6 yuan, expiring mid-April, offering about 6x leverage. Additionally, for international gold-related assets, such as Zijin International Gold (02259.HK), we have another warrant 24632 with a strike price of around 209 yuan, expiring early July, offering approximately 3x leverage. You can view these terms clearly on our website.

When the market changes rapidly, you may not remember all product terms, but that's okay. Visit the BOC International website at bocifp.com, where the homepage features daily news topics, hot trends, and relevant product references. You can also use the website’s product search function, such as for warrant searches or bull/bear certificate searches, to find all product information.

Simon: Besides gold-related sectors, another sector Niki frequently discusses is semiconductors, including Huahong Semiconductor (01347). Today, 1347's stock price surged to 122.8 yuan, showing strong performance recently. I’d like to ask, what’s the current sentiment among warrant market investors toward the semiconductor sector?

BOCI Director Niki: We have been talking about the chip sector from last year to this year, consistently emphasizing the development of the AI sector. Chips are an indispensable element for AI. Currently, for high-end chips, we may still need to continue importing foreign products to fill the gap. However, the urgency for self-development and R&D to improve product quality has been stressed by the country in recent years. A few days ago, there was news that NVIDIA started selling the H28 chip to mainland technology companies. Following that, the share prices of two leading stocks listed in Hong Kong, 981 and 1347, retreated a bit. But today, news came out that two mainland chip companies are facing overwhelming demand for their products, with some categories even seeing price hikes of 40% to 80%. Therefore, the demand for various types of chips is very strong. Today, chip stocks performed exceptionally well. For example, Huahong (01347) surged to around HK$122, which means it has risen 50% since the beginning of this year—a truly remarkable increase.

Some might think that after such a significant rise, is it still worth buying? I suggest first determining if your investment portfolio should include this type of industry. However, given the sharp increase over the past few days, you may want to wait for a slight pullback. The demand in this sector is genuinely robust, with substantial capital inflows, so it won’t see a major drop. You can consider purchasing stocks during a pullback or use 10%-20% of your funds to monitor related derivatives like warrants and callable bull/bear contracts (CBBCs). We offer a comprehensive range of Huahong’s warrant products, which you can view on our website (www.bocifp.com). For instance, Huahong's call warrant 26663, with a strike price of HK$145, expires in early May this year, offering leverage of approximately 3 to 4 times. When this product was issued, Huahong’s stock price was only in the HK$80 range, meaning the strike price of HK$145 was extremely out-of-the-money. But now, after just one month, the stock has climbed to HK$122, making it roughly 18% out-of-the-money, which is quite suitable.

You may notice that only BOCI offers products at this price level because we put a lot of thought into designing these terms and conditions when issuing products, hoping to bring returns and help you find favorable terms and pricing. If you feel certain terms are unsuitable or that market changes have left no appropriate options, feel free to contact us. For example, if you think 'the leverage of this product is too low; can you issue something with higher leverage?' or 'can the product price be slightly lower?'—all feedback is welcome. Even if you believe there are no available warrants for a specific stock but you’re interested in its derivatives, you can call 39886909 to let us know. However, there are two prerequisites for issuing warrants and CBBCs: First, the stock must be approved by the Hong Kong Stock Exchange for issuance; second, we must evaluate the stock’s liquidity. If major shareholders hold too large a stake, insufficient market liquidity could affect our hedging ability and thus impact issuance. Nevertheless, I encourage everyone to call, and I will listen to your opinions and relay them to the team to see what can be done. If feasible, we will make every effort to meet your expectations.

Simon: So, investors, if you have any questions about warrant products, feel free to call BOCI's hotline at 39886909 and communicate with Niki and her team to learn more about different product information.

Simon: Let me bring up another sector. On BOCI’s homepage today, there’s a prominent news article about Alibaba (09988), whose stock price continued to rise today. I’d like to ask what recent investor sentiment toward Alibaba is like in the warrant market?

Niki from BOC International: Alibaba is one of the most outstanding leading tech stocks. At the beginning of this year, its stock price was around 140 HKD, and now it has risen to 172-173 HKD, hovering near 173 HKD, looking for opportunities to break through further. Fundamentally, Alibaba looks positive for several reasons. First, there’s talk about the potential spin-off of its semiconductor business—similar to how Baidu plans to spin off Kunlun Cloud—which has drawn significant market attention. Such spin-offs are generally positive because they enable valuations to better reflect market assessments, potentially boosting the company's overall value. Second, regarding Ele.me’s previous price war incident, Chinese regulators have been closely monitoring and advising platforms not to focus solely on price competition but instead improve service and quality. Therefore, the price war phase likely ended, and related short-term losses shouldn't impact the company anymore. Third, Alibaba is advancing its AI business, integrating AI technologies into platforms like Fliggy and AutoNavi, giving confidence in future growth driven by AI.

During this period, we’ve also seen continued investor interest in Alibaba-related investment instruments. For call warrants, you can refer to 22984, with a strike price of HK$207.19, expiring around mid-April this year, offering leverage of approximately 8 times; for put warrants, you can look at 21943, with a strike price of HK$144.09, expiring in mid-June this year, offering leverage of about 5 times.

Simon: Today’s market is quite hot, with many sectors and individual stocks showing positive momentum. BOCI’s website features numerous themes. Niki, could you quickly give everyone an overview? Besides the previously mentioned 2899, 1347, and 9988, what other hot topics are currently trending in the market?

Niki, Director at BOC International: Actually, there are many hot topics in the market recently. Most sectors have rebounded and risen following the broader market and index trends, though some have lagged behind. For instance, Xiaomi (01810), Meituan (03690), and automotive stocks like BYD (01211) saw about a 4% rebound today.

1. Precious metals and gold sectors we analyzed before, such as Luoyang Molybdenum (3993), remain worth monitoring;

2. AI concept stocks and tech enterprise sectors are also worth watching.

3. Even recently, trading in Hong Kong stocks and A-shares has been relatively active. HKEX (00388), as a beneficiary company due to the significant increase in market turnover and continuous large IPOs being listed in Hong Kong, will see increased revenue, so it remains a favorable outlook.

4. A-shares have also reached a recent high, so domestic insurance stocks with heavy investments in A-shares, such as China Life Insurance (2628), have shown very strong performance recently.

5. There are also domestic demand stocks; Pop Mart (09992) seems to show signs of bottoming out and rebounding. The newly launched Molly phone case IP products received positive market feedback, along with other new product launches.

Today, bank stocks in mainland China also rose significantly. Overall, there is more positive news in the market, and this upward trend is likely to continue until before the Lunar New Year. I hope everyone’s investments go smoothly, earning good returns. If you trade CBBCs or warrants, you can refer to BOCI's products.

Simon: Everyone can pay more attention to the BOC International website; the homepage headlines are updated daily. If you have any questions about product information, feel free to call the BOC International hotline at 39886909 and talk to Niki and her team. Time’s almost up for today, thank you, Niki, for your sharing. I hope next week we can bring more diverse investment insights to everyone. Thank you, Niki.

BOCI Director Niki: Thank you, Simon, I’m also happy to chat with you. Every time we talk, the market shows new directions. Given the current heated market, let’s discuss and share perspectives from both investors and issuers to provide valuable insights that help everyone start this year's investment journey successfully.

Simon: Absolutely, thanks to your kind words. I hope all investors make good profits. Thank you, Niki, 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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