[BOC Guest Commentary]: Hang Seng Index, China Mobile, Zijin Mining, Zijin Gold International, Pop Mart, Xiaomi Group - Post-market analysis on February 3rd

Simon: Hi Niki, it's Tuesday again. We can have a chat about Hong Kong stocks and talk about the situation with CBBCs. Thank you so much for taking time out of your busy schedule every week. These past two days have been incredibly hectic with significant market fluctuations. So I wanted to ask, given this, $Hang Seng Index (800000.HK)$

recently there’s been quite a bit of volatility, even today has been highly volatile. From your perspective as an issuer, what advice do you have for CBBC investors in the current volatile market conditions?

BOC International Director Niki: Yes, indeed. Everyone these past couple of days has genuinely felt how the market can be influenced by the rise or fall of one or two sectors, affecting overall investment sentiment. Therefore, at this time, investors should closely monitor market dynamics. For example, by using the Hang Seng Index bull-bear certificate distribution chart, you can roughly assess whether after an 800-point drop, are actual investors mainly buying long positions at lower levels or still bearish? Once you have this basic assessment, it becomes relatively easier to predict future market trends. Why don’t you visit our website? Let me repeat, our website is (www.bocifp.com). Inside the website, there is something called the 'Options' bull-bear certificate distribution chart. I strongly recommend everyone check it out today. You’ll see red areas at the top indicating short positions (bear certificates), which account for 24%, while near the golden-yellow area below, the proportion of bull certificates is approximately 76%. This 76% ratio is the highest level I’ve seen in nearly half a year. It means that after the market dropped to around 26,500 points, investors were keen to buy at lower levels, expecting a rebound. Thus, you'll notice that 76% of the funds are concentrated in bull certificates. In terms of heavy positions, every 100 points approaches 1,100 futures contracts. Therefore, it shows that people believe the market will find some support around the 26,000-point mark, based on investor views inferred from the Hang Seng Index bull-bear certificate distribution data.

As you can see, investors are actually willing to buy at lower levels. Therefore, while the market dropped 800 points yesterday and major stocks or various industry sectors experienced significant adjustments, in reality, investors were buying. However, I want to remind everyone that since the beginning of this year, starting from January, as I mentioned on the show, we have observed that global financial markets have been influenced by many international news events and fluctuations in commodity prices, affecting investors’ nerves. Hence, market volatility has significantly increased, with movements of around 800 points becoming common. So, in such a highly volatile market, you need to be more cautious when entering. You should wait until the market stabilizes before betting on a rebound, rather than hastily assuming it's close to the bottom after a drop of one or two hundred points. I suggest checking where the heavy accumulation zones for related bull contracts are and considering whether they might fall near these zones before contemplating a rebound, which would increase your chances of success. Because overall, market volatility is indeed very high.

Regarding indices, we provided some relatively close-to-price tools yesterday and today (3rd). Since the market fell back from 28,000 points to around 26,000 points in just a week or two, market volatility has expanded. For products, you can check our website. For example, we have two bull contracts with recovery prices near 26,400 points; one has the code 60960, and the other is 60495. As for bear contracts, there are also two options available with recovery prices of 27,100 points and 27,200 points, coded 62722 and 62750 respectively. We update these products based on current market conditions, so I recommend closely monitoring our website or using the search function to find suitable tools.

Simon: As Niki mentioned earlier, market volatility has indeed increased since the start of this year, whether looking at daily fluctuations or movements over a period of time, they are relatively large. This year’s market situation won't be so straightforward, sometimes with significant ups and downs. Frankly speaking, investors should refer not only to the product information we provide during market hours but also consult us if they have any questions, especially within the first 15 minutes to half an hour after the market opens, seeing larger fluctuations. Is this the time when investors call you more frequently?

Niki, Director of BOC International: Yes. Sometimes investors may have questions about the opening price of a product, or they notice rapid market changes and want to quickly find the most suitable product tool for the market. The quickest way is to call us. We can immediately analyze data from our system and offer suitable tool recommendations. So, whether in the morning or afternoon after the market opens, feel free to call our Warrant Hotline: 00+852 3988 6909 to contact BOC International colleagues who will answer your queries.

Simon: Therefore, everyone might want to remember this phone number. In volatile market conditions, practical information becomes even more necessary. If you have any questions after the market opens, you can call the Warrant Hotline 39886909.

Simon: Let’s move on to individual stocks. The first one I want to discuss with Niki is China Mobile (00941). You can see that China Mobile's stock price has had some minor fluctuations, hitting a low of 75.85 yuan yesterday (2nd), but rebounded somewhat today. I wonder, recently, have funds started to bet on a rebound or buy some call warrants?

Niki, Director of BOC International: Actually, there was news released yesterday morning stating that the VAT rate for mainland telecom operators increased from around 6% to 9%. After the related news came out, several telecom companies responded and confirmed the situation, and the market paid attention to whether the tax rate increase would impact their revenue and profitability. Hence, relevant telecom stocks saw noticeable adjustments yesterday, but the market has stabilized somewhat today.

For instance, China Mobile hit a low of around 75 yuan yesterday, but rebounded to approximately 78.5 yuan today. Overall, there was a clear inflow of funds into China Mobile’s bullish positions yesterday. Regarding product choices, investors mostly opted for China Mobile's call warrant 24413 as a rebound play, with an exercise price of 88.88 yuan, expiring at the end of September this year, and offering leverage of about 13 times. Bearish investors can refer to China Mobile’s put warrant 21625, with an exercise price of 75.83 yuan, expiring around mid-April, providing higher leverage of nearly 20 times. Thus, with recent news surrounding the telecom sector, you can monitor related investment tools.

Simon: As mentioned earlier regarding China Mobile’s put warrant 21625, its exercise price is 75.83 yuan, and yesterday's low was quite close to that price. So, bearish investors can consider this option. On the other hand, for those who are bullish, there is a product with a longer expiration date, still having over half a year left, coded 24413, with an exercise price slightly higher, around 88 yuan, offering 12 times leverage, which is a referenceable product for call warrants. Therefore, if you’re interested, keep an eye on the latest product information on the BOC International website.

Simon: Next, I’d like to discuss another stock with Niki, Zijin Mining (02899). You can see that today (3rd), Zijin Mining’s stock price rebounded somewhat, currently above the Bollinger Band on the daily chart. Have investors regained some confidence in it over these two days, buying related call warrants?

BOC International Director Niki: Actually, we've previously discussed the topic of gold prices with everyone. Recently, the rise in gold prices has indeed seen a breakthrough. In just one month, international gold prices have surged nearly 30%, which has surprised the market. The price of any product cannot only rise and never fall, so when seeing such rapid increases, the risks in the subsequent market are actually growing. What should investors do in this situation? I always believe that in the short term, because the increase has been too rapid, if you want to engage in short-term trading, the risk will be very high. I would remind everyone that if you're looking to make ultra-short-term speculations, it might not be a good time. Since gold prices are already at historical highs, volatility is also significant, and any slight adverse movement may cause a pullback from the highs. For instance, silver prices have dropped by almost 40% in the past two days. So, be cautious about large short-term fluctuations.

However, if you're considering long-term investment strategies, then during such adjustment periods, some investors might choose to enter the market. So, it depends on your perspective on gold prices. If you're thinking about short-term trading, I would suggest holding off for now because it's difficult to pinpoint the best timing for further rises. After all, with a 30% increase in one month, the probability of further increases is relatively low, while the likelihood of a decline is higher. From a medium to long-term perspective, after considering factors like global central banks' stance on gold and the future trend of the US dollar, if you still wish to invest long-term, be mentally prepared for possible substantial short-term fluctuations. But as long as you're not engaging in short-term trading but rather long-term investment, you can find a good entry point at this time.

Therefore, in terms of investment tools, you can see that we offer many related products, such as paper gold, international gold-related products, and the 2840 Gold ETF. So, you can choose based on your needs. After all, the profitability of listed companies like paper gold or Shandong Gold will be affected by their operating costs, but if you're purely speculating on gold prices, products like 2840 will align more closely. For example, today, gold prices rebounded close to $4,900 per ounce, and investors will find that buying products like 2840, which purely track gold prices, offers a closer alignment.

So, it depends on how you decide to enter the market. Of course, if speculators are looking for leveraged instruments with lower operational costs and without requiring substantial capital, such as Zijin Mining’s related call warrants, you can refer to the tools on our website, like the warrant with code 21590, with a strike price of 48.6 yuan, expiring in mid-April this year, offering leverage of about 7 times. As for Gold International (02259) related products, you can consider the product with code 24632, with a strike price of 209 yuan, expiring in early July this year, offering leverage of approximately 4 times.

Simon: Actually, as mentioned earlier, every investor facing market fluctuations needs to clarify whether their strategy is for short-term speculation or medium to long-term holding. Once the investment direction is determined, it’s more important to visit the BOC International website and use the warrant search function to select suitable products based on your strategy. Many times, investors mismatch their positions—for instance, choosing long-dated products for short-term trades, or selecting short-term high-leverage products for long-term holding. Hence, everyone should really compare product terms. If you find it complex, as previously suggested, you can call BOC International’s Warrant Hotline to consult with Niki or her team colleagues to learn about which products are relatively suitable in the current market. Everyone can benefit from exchanging ideas and communicating.

Simon: Next, I’d like to discuss another stock with Niki, Pop Mart (9992). Looking at the recent few trading sessions, Pop Mart's share price movement has been relatively stable. In the current volatile market environment, will there be more capital inflows into Pop Mart in the warrant market?

BOC International Director Niki: Pop Mart was also one of the top consumer brand stocks chosen by everyone last year. Entering this year, we’ve indeed seen frequent news about the company’s expansion. For instance, yesterday, it was mentioned that Pop Mart plans to set up its European headquarters in London, UK, and intends to open seven new stores in the UK to meet the strong demand for its products. There is already a Pop Mart representative in the UK. Therefore, although the Hong Kong stock market has been quite volatile recently, dropping over 800 points, Pop Mart has managed to rise against the trend. This news indicates that the market has a positive attitude towards Pop Mart’s developments.

Thus, in terms of market tools, we also offer a pair of products for your reference. If you continue to be optimistic about Pop Mart’s future performance, with the current share price around 230 yuan, you can consider slightly out-of-the-money products, like Pop Mart’s call warrant 22285, with a strike price around 260 yuan, expiring in mid-April this year, offering leverage of about 6 times. For Pop Mart’s put warrants, you can look at the product with code 21876, with a strike price of 209.85 yuan, expiring in mid-April this year, also offering leverage of about 6 times.

Simon: So, based on your investment preferences, you may want to consider. The share price of Pop Mart has been relatively strong recently. Of course, further judgment is needed regarding its subsequent trend.

Simon: Before we wrap up today, let's talk about another underlying stock, Xiaomi (01810), whose stock price has always been somewhat disappointing. You can see that Xiaomi’s stock price has remained low recently. How is investor sentiment towards Xiaomi in the warrant market?

BOC International Director Niki: Indeed, you can see that Xiaomi’s stock price has been falling from around 60 yuan last year, and recently broke below its previous low. The previous low was 34.5 yuan, and now it has reached around 34.36 yuan. Lately, some automotive peers have announced their sales data from last month, and it's noticeable that different brands are encountering a problem: January sales compared to the same period last year have declined. Therefore, the market is paying close attention to industry conditions—whether competition has become more intense or whether consumer enthusiasm for purchasing new products and sales performance are not particularly ideal.

Hence, there’s also considerable attention on Xiaomi, and you can see that Xiaomi’s stock price continues to hover at low levels. Although the company stated it would repurchase shares worth 2.5 billion yuan, this scale, compared to last year, has also caught everyone's attention. Lei Jun had previously used personal funds for buybacks, and the company has been progressively conducting repurchases. However, although a 2.5 billion yuan repurchase was announced this time, the stock price still needs time to reflect this. On the investor side, both sides are participating. Optimistic investors believe that, in the medium to long term, the company putting forth such a significant amount for repurchases indicates confidence in its medium to long-term development. Hence, recently, there has been relatively more capital inflow into call warrants. For Xiaomi’s call warrants, you can look at the product with code 24845, with a strike price of 43.88 yuan, expiring at the end of July this year, offering leverage of about 6 times. For investors who remain bearish on the medium to long term, you can refer to Xiaomi’s put warrant 22284, with a strike price of 27.8 yuan, expiring at the end of June this year, offering leverage of about 6 times.

Simon: Actually, I also wanted to ask Niki, given that stock prices are fluctuating with some high and some low, could you repeat the hotline number again? Because in the current volatile market, everyone is quite concerned and worried, whether it's about the movement of individual stocks or seeing some stocks drop significantly. Are there other notable sectors or highlights worth paying attention to? Often, we all have various questions, including myself—I ask you every week about the currently trending sectors. So, would you mind repeating the hotline number again for everyone’s convenience in case they need to contact you quickly?

BOC International Director Niki: Sure, our hotline is specifically set up to facilitate consultation calls. For instance, people can inquire about how their previously purchased products are performing now, whether there are any recommendations, or if there are other suitable tools they can refer to. The quickest way is to call me directly. Of course, we also encourage everyone to visit our website, where you can input your preferred product terms and select suitable products. As for the phone number, let me repeat it: Warrant Hotline: 00+852 3988 6909. During Hong Kong stock trading hours, you can call me or my colleagues, and we will address your queries.

Simon: Yes, as you just mentioned, investors can go online to check product searches, and besides product search, they can also look at the featured news on the homepage. For example, today’s news related to Macau stocks has been a focus in the market, along with some automobile stocks and even news regarding Alibaba. This information can be accessed more quickly on BOC International's website. Our time is almost up today, and as I know during market fluctuations, Niki tends to be quite busy handling calls, launching products, or monitoring product performance—issuers indeed have a lot on their plate. Thank you very much, Niki, for taking the time to join us, and hopefully, we can chat again next week. Thank you, goodbye.

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 are not responsible for any loss or damage caused by reliance on the information in this article. Technical analysis only shows whether certain technical conditions are met; a comprehensive assessment of asset performance should be conducted using additional data. Decisions to trade should not be based solely on this article. Please note that past performance is not indicative of future results.

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