April 10 [HK Stocks Podcast] Part 2 - SMIC, Great Wall Motor, Tencent

1. The most noteworthy point for SMIC now is not whether the stock price rebounds, but whether the range between HKD 58 to 60 can evolve from a technical rebound into a more complete recovery trend. Regarding investors asking 'whether it can return to HKD 60-70 next week,' separately analyzing, reaching HKD 60 is achievable, but jumping directly to HKD 70 remains overly optimistic at this stage.

SMIC closed at HKD 58.25 on April 10, with an intraday high of HKD 59.60 and low of HKD 56.90. After rebounding from the recent low of HKD 49.32, the stock has regained its position above the 5-day and 10-day moving averages in the short term, gradually approaching the 250-day moving average around HKD 59.94. This indicates that the short-term sentiment has indeed improved, at least no longer showing a continuous sharp decline, and a repair movement after bouncing off the lows has started.

However, the issue is that the stock price has yet to truly recover the stronger mid-term resistance levels above. On the chart, the 20-day moving average at approximately HKD 56.97 has been regained, which helps improve the short-term trend; however, the 30-day line at about HKD 59.38, the 60-day line at HKD 66.39, and the 120-day line at HKD 69.18 are still above. This means the area from HKD 60 to near HKD 70 is not a vacuum zone but rather a dense resistance zone. In other words, even if the stock continues to rebound next week, it will likely encounter its first test near HKD 59.60 to HKD 60 instead of pushing directly toward HKD 70.

Therefore, if only asked whether it can reach HKD 60 next week, the answer is that it's possible, but it depends on whether it can hold above HKD 56.90 and then break through resistance near HKD 59.60 and the 250-day moving average.

If it stabilizes above HKD 59.60 and further breaks above HKD 60, the short-term rebound may extend, targeting the range of HKD 62 to HKD 64, which would be a more reasonable next target.

However, if the target is directly set at $70, one must be extremely cautious. This is because there is the 60-day moving average near $66 and the 120-day moving average around $69. Additionally, after the share price retreated from its previous high, the overall structure has not completely reversed its intermediate-term weakness. This means that even if there is a continuous rebound next week, it is more likely to be a recovery phase rather than fully recovering the entire downtrend in a short period. Therefore, $60 is achievable, but $70 remains an aggressive assumption for now.

As for investors who are paying attention to bull certificates with a recall price of $49.8, the rationale behind such positioning is not difficult to understand. This is because $49.8 is very close to the recent low of $49.32. If investors believe that the current low has largely stabilized and the stock price is rebounding from this low, these bull certificates closer to the bottom will indeed attract significant capital interest. Especially as the market sees the underlying stock rise from below $49 to around $58, naturally, some may feel that bull certificates with a lower recall price are 'relatively safe.'

However, it is important to note that although these products are relatively less ultra-short-dated bull certificates, it does not mean they carry no risk. SMIC is currently still in a rebound and recovery phase and has not yet fully regained its intermediate-term upward momentum. If the stock price fails to stabilize above $56.90 or even drops below $54.80, the rebound momentum could be disrupted. At that point, the market would retest support in this recent low area. For holders of bull certificates, this means that although the underlying stock is still some distance away from the recall price, if the market pullback deepens, product volatility will still increase significantly.

Technically, the immediate support levels to watch are $56.90 and then $54.80; resistance levels are $59.60, followed by $60.80 to $62.00.

Therefore, the turning point ahead is clear: if the stock can stabilize above $59.60 and break through $60.80 to $62.00, the rebound may expand. However, if it fails to hold $56.90, be prepared for a failed rebound and renewed weakness.

In summary:

It’s not impossible for SMIC to return to $60 next week, but it needs to first break through the $59.60 level. As for $70, it remains too far for now, and the current rebound appears to be more about recovery from a low rather than a full reversal into strength.

Great Wall Motor’s situation currently resembles a rebound from a low, entering an initial stabilization phase, though it hasn’t yet reached the point of confirming a full reversal to strength. If investors ask, “Has it stabilized?”, the answer is: it’s more stable than before, but true strength will require overcoming several resistance levels above.

The stock closed at $13.75 on April 10, with an intraday high of $13.77 and a low of $13.06. The trend shows that the stock has rebounded significantly from its earlier low of $11.78 and has recaptured the 5-day, 10-day, and 20-day moving averages, indicating a notable improvement in the short-term structure. This suggests that market selling pressure has eased, and funds have started to accumulate at lower levels, breaking away from the previous one-sided downward search pattern.

However, it is still too early to consider this a full recovery. Although the stock price has returned above the short-term moving averages, the key 30-day line at approximately $12.80 and the 60-day line at around $13.14 have been mostly reclaimed. More importantly, the next major resistance lies around the 120-day line at $14.11 and the 250-day line at $13.98. In other words, the current stability resembles more of a recovery from weakness into a rebound rather than a complete reversal of the intermediate-term trend.

So, if asked about the next target, the short-term first objective can be set between $13.90 and $14.10. This range coincides with the convergence zone of the 250-day and 120-day lines, which itself represents a significant resistance area. If the stock can stabilize above $13.75 and effectively break through the $14 mark, the rebound could extend further, with the next target potentially reaching $14.40 to $14.70.

However, if it fails to break through the range of 13.90 yuan to 14.10 yuan and instead falls back again, it is important to observe whether the current rebound is merely a technical pullback. Immediate support below is at 13.25 yuan, followed by 12.80 yuan to 12.85 yuan. If this range can still hold, the overall stabilization pattern remains intact; if it breaks down, it means this round of rebound is not yet stable enough, and the share price may return to a sideways consolidation.

In terms of rhythm, the most reasonable judgment now is that Great Wall Motor has rebounded from its lows and started to emerge from its weakest phase, but true confirmation of stabilization will depend on whether it can firmly stand above 13.75 yuan and further break through the resistance zone of 13.90 yuan to 14.10 yuan.

In summary:

Great Wall Motor is currently showing initial signs of stabilization after a low-level rebound. The short-term target is first at 13.90 yuan to 14.10 yuan; if it successfully surpasses this, there is potential to look towards 14.40 yuan to 14.70 yuan.

The most critical issue for Tencent now is not whether the market reacts emotionally to buybacks, but whether the position near 500 yuan can transition from a low-level rebound into a more complete recovery. Regarding investors' concerns about the stock potentially dropping to 450 yuan once buybacks stop next week, based solely on the current daily chart trend, the likelihood of an immediate drop to 450 yuan is temporarily low, but the area around 500 yuan is still not completely stable.

Tencent closed at 504.50 yuan on April 10th, with an intraday high of 514.00 yuan and a low of 501.00 yuan. After rebounding from the earlier low of 476 yuan, the stock has now returned above 500 yuan and is again approaching the 5-day moving average. In terms of trend, the sharpest phase of the decline has been overcome, and initial signs of repair are emerging following the rebound from the lows. However, upward momentum is still constrained by resistance from the 10-day moving average around 496.69 yuan and additional pressure from the 20-day and 30-day moving averages above. Thus, this rebound remains more of a recovery in nature rather than a confirmed return to strength.

Therefore, if asked whether the stock could suddenly drop to 450 yuan, technically several layers of support would need to fail before such risk arises. The nearest support below is between 500 yuan and 493 yuan, followed by the recent rebound starting point near 476 yuan. If even 476 yuan fails to hold, the market will clearly start looking towards lower levels, including 465 yuan or even 450 yuan. In other words, while 450 yuan is not entirely impossible, based on the current chart structure, it represents a weaker scenario further down the line, not the most immediate or likely outcome for next week.

On the other hand, for Tencent to ease investor concerns that 'the absence of buybacks will lead to a sharp drop,' the key is to defend the 500-yuan level and further break through the short-term resistance zone of 510 yuan to 515 yuan. If achieved, there is potential for the stock to move higher, targeting the next level around 524 yuan to 525 yuan, which aligns with the 20-day and 30-day moving averages. However, at this stage, this remains a resistance test after the rebound, not an effortless opening of significant upside space.

Turning to the warrant market, some investors bought 200,000 call warrants before the close, betting on a rise next week with a strike price of 649.38 yuan. Directionally, optimism about Tencent’s rebound next week is not entirely baseless, as the stock has already rebounded significantly from 476 yuan, improving short-term technical sentiment. However, considering product structure, the strike price of 649.38 yuan is quite far from the current price of 504.50 yuan, making it an out-of-the-money call warrant. Such products typically require a strong and forceful rally in the underlying stock to perform noticeably; if the stock only experiences a mild rebound or moves within the 500-525 yuan range, the performance might disappoint investors’ expectations.

In other words, while the investor's bullish direction may not be wrong, the tool chosen may not be well-suited to the current rhythm. At present, Tencent is more focused on stabilizing above 500 yuan and attempting to advance towards 510-525 yuan, rather than quickly entering a region more favorable to deep out-of-the-money call warrants. If the stock fails to rapidly expand gains, these farther strike-price call warrants are likely to leave investors feeling that 'the direction is right but the product response is lackluster.'

On the other hand, some investors have taken profits by exiting bull contracts with a knock-out price of 440 yuan, a move that is quite reasonable. Since 440 yuan is at a safe distance from the current price, and given Tencent's rebound from 476 yuan, these low knock-out price bull contracts have already captured significant profits from the stock’s recovery. Although the stock has now returned above 500 yuan, resistance above remains. Taking profits now reflects acknowledgment that the market hasn’t yet entered a clear upward trajectory, representing a relatively cautious strategy.

Overall, Tencent’s current pattern looks more like a recovery after a low rebound. The focus for next week is not whether it will immediately drop to 450 yuan, but whether it can hold above 500 yuan and whether it can break through 510 to 515 yuan. If it holds steady and breaks through again, the rebound could extend; if it fails to hold above 500 yuan again and falls back below 493 yuan, market concerns about another test of 476 yuan will increase.

In summary:

The chance of Tencent directly falling to 450 yuan in the short term is currently low, and at this stage, it seems more like a tug-of-war around the 500-yuan mark. Holding above 500 yuan could lead to a further rise towards 510 to 525 yuan, but breaking below 493 yuan would warrant caution for another test of 476 yuan.

Reminder: 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 combine other data and should not solely rely on this article to make trading decisions. Please note that past performance is not indicative of future results. Follow Jenny's insights on Hong Kong stock warrants for more professional analysis.

$Hang Seng Index (800000.HK)$ $Hang Seng TECH Index (800700.HK)$ $Hang Seng China Enterprises Index (800100.HK)$ $HKEX (00388.HK)$ $BABA-W (09988.HK)$ $NTES-S (09999.HK)$

163K Views