SMIC sees surge in trading volume, funds positioning ahead of earnings

$SMIC (00981.HK)$ SMIC sees surge in trading volume, funds positioning ahead of earnings

Today (May 11), SMIC's share price performed strongly, closing at 76.7 yuan, up 5.73% from the previous day, with a turnover of 6.61 billion yuan. Over the past five trading days, the stock price fluctuated by about 12%, showing a significant expansion in volatility. The short-term trend has shifted from earlier consolidation back to a strong upward trajectory.

From a technical perspective, SMIC's current share price has broken through several key moving averages. The 10-day line is around 71.65 yuan, the 30-day line is approximately 61.68 yuan, and the 60-day line is near 63.19 yuan; all have been surpassed by the current price. Notably, the 30-day and 60-day lines have formed a golden cross pattern, solidifying the foundation for a medium-term upward trend. The current price is gradually approaching the 52-week high of 93.50 yuan set in late March, with the short-term upward trend remaining intact. First support is at 68.9 yuan, second support at 60.6 yuan; first resistance is at 81.6 yuan, second resistance at 91.0 yuan, with a 51% probability of further increases. Today's highest price reached 77.85 yuan, while the lowest was 75.55 yuan, with the price mostly staying near highs throughout the day, indicating active buying interest.

The Relative Strength Index (RSI) stands at 71, entering a strong region but not yet at an extreme overheating level, suggesting that short-term momentum remains robust without immediate signs of weakening. In terms of Bollinger Bands, the current price has clearly broken above the midline and is heading towards the upper band, indicating the stock is within a strong range, making it highly likely that the short-term trend will continue. Although the comprehensive signal from technical indicators suggests a 'sell,' there are divergences among various oscillators: CCI signals a buy, ADX and psychological line indicators also suggest buying, as does MACD. Notably, the bull-bear power indicator currently shows neutrality, meaning while short-term upward momentum is strong, further acceleration may require clearer buying pressure.

On the news front, today's stock price surged, likely driven by expectations related to the Q1 2026 earnings report scheduled for release this week. The market consensus predicts that the company will report earnings of approximately RMB 0.025 per share in Q1, prompting investors to position themselves ahead of the announcement. Additionally, several major banks have recently expressed positive views on China’s semiconductor industry outlook. CLSA reiterated its “Outperform” rating for SMIC, noting that the stock is expected to benefit from the overall semiconductor upcycle and continued strengthening of advanced logic businesses. DBS Bank has even raised SMIC’s target price to RMB 87.4 from a lower level, maintaining a “Buy” rating, citing the company’s leading position as a 7nm-level wafer foundry in China, which stands to gain from the reshoring strategy of 'locally designed, locally manufactured' supply chains.

In the short-term analysis, SMIC is currently in a strong breakout phase. If the stock can hold steady above the RMB 68.9 support and move further upward, the first resistance at RMB 81.6 could be tested, with the mid-term target set at RMB 91.0. Conversely, if profit-taking occurs after the upcoming earnings release, a pullback to around the RMB 68.9 support level would be an important reference point for assessing buying interest. Given that the Relative Strength Index (RSI) has risen to 71, entering the stock now carries a moderately high risk-reward ratio. A more conservative approach would be to wait for the stock to retest the 10-day moving average for confirmation of support before making a low-risk entry, or to follow the trend once the RMB 81.6 resistance is broken.

Warrant Product Review

Reviewing the warrant products mentioned on May 7, here is their performance within two trading days after the mention (up to May 9). HSBC Bull Certificate (64896) recorded a 6% increase, compared to a 1.04% rise in the underlying stock during the same period; HSBC Call Warrant (20113) also gained 6%, outperforming the underlying stock. UBS Bull Certificate (product code not specifically listed in the prompt) also rose by 6%. The underlying stock edged up slightly from about RMB 76.8 to RMB 77.6 during the period, while the three products significantly outperformed the stock, reflecting successful leverage effects and timing of the rebound.

Warrant Product Recommendations

The following products are analyzed based on SMIC’s current stock price of RMB 77.55 and are correlated with the aforementioned support and resistance levels.

For bullish strategies, if SMIC can hold the RMB 68.9 support and break through the RMB 81.6 resistance, two call warrants can be considered. Bank of China Call Warrant (23604) $BI-SMIC@EC2611A.C (23604.HK)$ , with a strike price of RMB 83.88 and effective leverage of 3.9 times, offers the advantage of having the lowest implied volatility among similar products, along with relatively higher leverage. Lower implied volatility means the product price is less affected by market sentiment fluctuations, allowing it to track the underlying stock movement more directly. The strike price of RMB 83.88 is slightly above the first resistance at RMB 81.6, making it suitable for those expecting the stock to break through that resistance and advance toward the RMB 91.0 target. $SG-SMIC@EC2611A.C (26591.HK)$ , with a strike price of RMB 83.93 and effective leverage of 3.9 times, offers ideal leverage and implied volatility, with terms similar to the Bank of China product. Investors can choose between the two based on issuer preference.

For bearish strategies, if SMIC faces resistance between RMB 81.6 and RMB 91.0 and retreats, or breaks below the RMB 68.9 support and weakens, consider the following two put warrants. HSBC Put Warrant (21090), with a strike price of RMB 62.81 and effective leverage of 9.5 times, boasts the lowest premium and implied volatility in its category, making it suitable for capturing short-term downward momentum after breaking below support. The strike price of RMB 62.81 is notably lower than the second support level at RMB 60.6, requiring a significant weakening in stock price to gradually move into the money. Its high leverage suits stronger bearish expectations. Citi Put Warrant (28711), with a strike price of RMB 63.88 and effective leverage of 3.8 times, offers relatively ideal leverage and implied volatility, with milder leverage compared to the HSBC product, suiting investors anticipating modest pullbacks but preferring to maintain patience in holding positions.

For bull and bear certificates, investors who are bullish and prefer setting clear stop-loss intervals may consider UBS Group Bull Certificate (64257) $UB#SMIC RC2610K.C (64257.HK)$ , with a call price of RMB 65, effective leverage of 5.6 times, relatively high actual leverage, and low premium. The call price of RMB 65 is below the first support level of RMB 68.9, providing a safety buffer of about 16% from the current price while maintaining high leverage. This makes it suitable for short-term rebound plays, assuming the stock holds the RMB 68.9 support. HSBC Bull Certificate (64896) $HS#SMIC RC2611F.C (64896.HK)$ With a recovery price of 64 yuan, the effective leverage is 5.2 times, and the actual leverage is the highest in its category with a lower premium. The lower recovery price offers a larger safety buffer, making it suitable for investors who are confident in a continued rebound and wish to retain more room for error.

For those bearish on the stock, Societe Generale's bear certificate (62816) can be selected, with a recovery price of 85 yuan and an effective leverage of 10.8 times. The actual leverage is the highest in its category with a relatively low premium. The recovery price of 85 yuan lies between the first resistance at 81.6 yuan and the second resistance at 91.0 yuan, meaning there would only be a risk of recovery if the share price clearly surpasses 81.6 yuan. If the share price encounters resistance and falls back near 81.6 yuan, this certificate can effectively follow the pullback; its high leverage makes it suitable for short-term bearish strategies. UBS Group’s bear certificate (60530), with a recovery price of 84 yuan and an effective leverage of 12.7 times, has the lowest premium and relatively higher actual leverage. Its recovery price is lower than Societe Generale’s bear certificate, offering greater sensitivity to stock price declines, making it suitable for investors expecting limited rebound potential and quicker pullbacks after encountering resistance.

Warm Reminder: This article does not constitute any investment advice. It 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 evaluation of asset performance should be made using other data, and trading decisions should not be based solely on this article. Please note that past performance is not indicative of future results. Follow HK Stocks Warrants Jenny for more professional insights.

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