Hong Kong stocks are rebounding—what sectors deserve attention?

港股窩輪Jenny

joined discussion · ·

The Hang Seng Index hasn't broken out yet, but individual stocks have already shown their strength: I'll look at technical levels, short selling, and warrants/CBBCs together. Here is my deployment plan for Monday.

Friday's Hang Seng Index $Hang Seng Index (800000.HK)$ closed at closed at 25,584.79 points, rising only 19 points for the day. The daily chart remains in a rather awkward position: the current price is close to the middle band of the Bollinger Bands at around 25,624 points, with the RSI at approximately 50, showing no upward breakout nor downward breakdown. I currently still view the 25,400 to 25,700 point rangeas the decisive zone for short-term trading. Only above 25,700 are there conditions to retest 26,000 to 26,070; conversely, if 25,400 is breached, we need to defend 25,180 or even 25,000.

So regarding the Hang Seng Index (HSI), my current stance isn't about predicting whether it will rise or fall, but ratherwaiting for the market to choose a direction first.CBBCs (Callable Bull/Bear Contracts) inherently carry high leverage. If you aggressively chase entries in a neutral zone like 25,500–25,600, and the HSI continues to trade sideways for another two or three days, you’ll likely find yourself trapped on both sides.

Reference for HSI CBBCs

I would first determine the market direction, then decide whether to opt for 15x leverage or sacrifice some leverage for a more distant call price, rather than simply buying the contract with the highest leverage. If you regularly trade HSI CBBCs, would you prefer an extra 2–3x leverage, or would you rather have your call price set 300–500 points further away?

To compare more HSI and individual stock Calls, Puts, Bull Contracts, and Bear Contracts at once, you can click “Warrant and Callable Bull/Bear Contract (CBBC) Product Overview”, where I’ve listed more products. The main text here focuses on factors that truly impact short-term positioning.

Meituan (3690) $MEITUAN-W (03690.HK)$ : Earnings are improving, but the chart hasn’t yet proven that the bears have lost.

Meituan returned to profitability in Q2, with revenue growth exceeding expectations, and there are signs that the price war in instant retail is cooling down. The most significant fundamental shift is that the market can finally start discussing "whether subsidy pressure has peaked," rather than just calculating how much more cash needs to be burned in the price war.

However, the short-term chart is not as promising as the fundamentals suggest. It closed at HKD 77.5 on August 28, with the RSI(14) at only 36.7, the 10-day MA around HKD 77.55, the 20-day MA at HKD 77.89, the 50-day MA at HKD 81.80, and even the 200-day MA around HKD 87.34. The stock price remains below its major moving averages. In other words, it currently resemblesfundamental improvement emerging in a weak trend,rather than a technical breakout. First, watch whether support holds near HKD 77. To move higher, it needs to regain stability above HKD 78 before having the momentum to challenge the HKD 81–82 zone near the 50-day MA.

Short selling activity also indicates that bears have not exited. On August 28, short sales totaled HKD 668 million, accounting for 25.8% of turnover; on the 24th, it briefly reached 37.3%. This ratio, combined with an RSI of just 36.7, suggests the market remains highly skeptical about the sustainability of this earnings improvement.

On the derivatives front, the picture is different: Meituan currently has 116 call options, 70 put options, 53 bullish CBBCs, and 127 bearish CBBCs. While the number of bullish CBBCs is not large, the outstanding volume of bullish CBBCs has risen to recent highs. With calls centered around 24% out-of-the-money and an implied volatility (IV) of approximately 48%, even though I am turning slightly bullish, I will not blindly chase deep out-of-the-money calls simply because earnings have turned profitable.If the HKD 77 support level holds and the price breaks back above HKD 78, I will compare bull contracts with at-the-money call options. However, if it fails to hold HKD 77, the existing open interest in bull contracts could turn into resistance.

For this stock, here’s what I’d like to ask everyone: Do you think Meituan's current situation is......a case where fundamentals improve first, with technicals lagging behind,...or do you feel the stock's weakness itself signals that the market does not believe in these earnings results?

Alibaba (9988) $BABA-W (09988.HK)$ : Short selling has retreated quickly, but a true technical breakout is still pending.

After Alibaba's earlier placement of approximately HKD 80 billion, Chairman Joe Tsai purchased another 720,000 shares, with management using real capital to express confidence in their AI investments. However, for the market, the key proof needed now is whether massive AI investments will ultimately generate sufficient returns, rather than just whether management is bullish on their own company.

Technically, Alibaba closed at HKD 113.9 on August 28, with the RSI(14) at approximately 40.1. The 10-day MA is around HKD 114.86, the 20-day MA is HKD 115.30, the 50-day MA is HKD 118.66, and the 200-day MA is around HKD 118.78. The share price remains below these major moving averages. This suggests that, at best, we can saythe downtrend is beginning to stabilize, but it is too early to claim a reversal to strength.I will first regard the HKD 115–116 range as the initial confirmation zone. Only after a decisive breakout above this level will I look toward the HKD 118–120 range. If support around HKD 112 fails again, we must re-establish defense at the post-placement lows.

However, changes in short-selling activity are worth noting. Following the placement announcement on August 24, Alibaba's short-selling volume reached HKD 14.199 billion, accounting for 34.99% of turnover,but by the 28th, it had dropped to HKD 1.428 billion, or 17.17%.This represents a nearly 90% contraction over five days, indicating that the most intense wave of one-time short-selling pressure has subsided.

In terms of derivatives (warrants and CBBCs), call options remain dominant for Alibaba. On August 28, call option turnover was approximately HKD 549 million. However, with moneyness around 21.5% out-of-the-money and implied volatility (IV) at roughly 47.7%, they are not considered cheap. Conversely, outstanding positions in bull contracts are at high levels, but recent turnover has not surged in sync. I interpret this aslong positions already being established, now waiting for the underlying stock to prove itself.。

Therefore, I will not rush to chase Alibaba near HKD 114; instead, I will focus on the HKD 115–116 rangeTreat this as a significant threshold. It only becomes truly interesting if short selling has significantly subsided and the stock price climbs back above the 20-day moving average; otherwise, it merely indicates "fewer people are shorting," which does not equate to active buying.

SMIC (0981) $SMIC (00981.HK)$ : The HKD 70 level is a short-term watershed. The biggest concern is expensive call options combined with a sudden rise in short positions.

SMIC's fundamentals are still supported by AI demand and capacity utilization rates, but short-term capital sentiment has become markedly more complex than in the previous two weeks. The stock closed at HKD 70.15 on August 28, with a daily high of HKD 72.9 and a low of HKD 69.85; the RSI(14) was approximately 48, remaining neutral. However, the 10-day MA is around HKD 71.02, the 20-day MA is HKD 70.44, and the 50-day MA is HKD 70.80, meaning the underlying stock has fallen to near or slightly below its short-to-medium term moving averages. The 200-day MA is around HKD 69.7, sothe HKD 69.5 to 70 range is actually a critical support zone; if it holds and rebounds to HKD 71–72, the technical structure can still be repaired; if it breaks below HKD 69.5, it will no longer be just normal volatility.

What requires closer attention is short selling. The short-selling ratios on the 24th and 25th were only 3.7% and 4.8%, but suddenly jumped to 17.5% on the 26th, 16.4% on the 27th, and rose further to 19.9%This isn't a case of sustained heavy short selling, but rather a sudden shift in market behavior over a few days.

On the product side, SMIC has 108 call options, with the median implied volatility (IV) of these calls at approximately 63%, out-of-the-money by about 25%, and with a premium exceeding 30%. This creates a combination I'm not particularly fond of:The technicals haven't broken out, short interest has suddenly increased, and the calls themselves aren't cheap.

So, I'm not bearish on SMIC; rather, I require higher confirmation. It’s only worth reconsidering calls if the price stabilizes again between HK$71 and HK$72 and the short interest ratio declines. If you're just looking to use leverage to play the direction, I would instead compare bull contracts (CBBCs), as they at least avoid the risk of a sudden contraction in IV.

If you are long SMIC, would you choose to 'buy near HK$70 first' or prefer to wait for confirmation at HK$72 before chasing? These two approaches represent completely different risk appetites.

Xiaomi (1810) $XIAOMI-W (01810.HK)$ : Short-term movement is stuck at HK$28; calls are not as attractive as imagined before a breakout.

Xiaomi has another chip-related catalyst: CXMT will supply LPDDR6 for the next generation of foldable phones, which are expected to feature Xiaomi's self-developed 3nm Xring O3 chip. This extends Xiaomi's narrative from phones and EVs to chips and AI hardware.

However, technically it is still moving sideways. It closed at HK$27.82 on August 28, with the RSI(14) at approximately 46.5The 10-day moving average is around HKD 27.85, the 20-day MA is at HKD 28.12, and the 50-day MA is at HKD 28.03. The underlying stock is currently sandwiched between several short-to-medium-term moving averages. The 200-day MA is around HKD 27.59, so the short-term structure is quite clear:Support near HKD 27.5 must hold, and it needs to break through the HKD 28.0–28.2 range. If it breaks above HKD 28.2, the next target would be HKD 28.5–29.0. Conversely, if it falls back below HKD 27.5, even positive chip-related news may not save the short-term technical chart.

Regarding short selling: on the 26th, it accounted for 28.2% of turnover; on the 27th, it rose to 33.3%; and on the 28th, it dropped to 22.5%. Therefore, bearish sentiment is cooling down, but at 22.5%, it is still not low, so we cannot say the situation has fully improved.

Xiaomi is a very typical stock dominated by warrants, with call warrant turnover far exceeding that of callable bull/bear contracts (CBBCs). The issue is that many calls are about 29% out-of-the-money, with implied volatility (IV) close to 48% and a premium exceeding 30%.The underlying stock is stuck at HKD 28, but many call options already require you to pay in advance for expectations of a future breakout.

Therefore, I would prefer to wait for a genuine breakout above HKD 28.2 before looking for calls that are closer to the money and have sufficient time to expiry, rather than chasing deep out-of-the-money products at HKD 27.8 just because of chip-related news. If this stock truly breaks out, the technical confirmation itself is more valuable than the news headlines.

Tencent (0700) $TENCENT (00700.HK)$ : Technically, it has the most complete setup among the major stocks, but there is still a resistance level near HKD 460.

Tencent closed at HKD 455.2 on August 28. Its short-term chart is actually much stronger than the previous few stocks. The RSI(14) is approximately 58.7, and the MACD remains positive; the 10-day moving average is around HKD 453.5, the 20-day MA around HKD 450, and the 50-day MA around HKD 447.9. The stock price still stands above all three lines. The only notable medium-term resistance is the 200-day MA at approximately HKD 460.4。

So, from a technical perspective, my view on Tencent is straightforward:Support near HKD 450 is the first level, with HKD 447–448 as the second support. On the upside, it needs to clear HKD 458–460 first; only after breaking through the 200-day MA should we look toward HKD 465–470. This structure is at least cleaner than that of Alibaba and Meituan.

Interestingly, trading volume in bear contracts rose to a recent high on August 28. However, short selling of the underlying stock was only 11.6%. Although the short-selling amount of HKD 1.47 billion exceeded the five-day average, the ratio has not spiraled out of control.

Therefore, I won't turn bearish simply due to the increase in bear contract volume. Instead, the current situation shows:The underlying stock is technically strong, short selling in the cash market is normal, but some derivative funds are beginning to increase bets on a pullback. This looks more like hedging near resistance levels rather than a full trend reversal.

In terms of products, the median implied volatility (IV) for Tencent calls is around 36%, significantly lower than that of SMIC, Hua Hong, and Xiaomi. If the HKD 460 level is truly breached, it would be one of the hot tech stocks I'd be more willing to revisit for call options; if it fails to break through 460 and trading volume in bear contracts continues to expand, then a reassessment would be necessary.

Hua Hong Semiconductor (1347) $HUA HONG GRACE (01347.HK)$ : The technical structure remains intact, but call option prices are already riskier than the chart suggests.

Hua Hong closed at HKD 120.6 on August 28, with the RSI(14) at approximately 56, the 20-day moving average at around HKD 119.1, and the 50-day moving average at around HKD 115.4. The underlying stock remains above these two key moving averages; however, the 10-day MA is at approximately HKD 121.7, while the 100-day MA at HKD 126.8 and the 200-day MA at HKD 136.3 are still overhead, so the current pattern resemblesa short-to-medium term rebound structure rather than a complete medium-term uptrend. First, watch for support at HKD 119–120. To move higher, it needs to reclaim HKD 122, then challenge the HKD 126–127 range.

Meanwhile, the short-selling ratio rose gradually from 8.3% on the 24th to 10% on the 25th, 15.3% on the 26th, 17.7% on the 27th, and [missing value] on the 28th 21.8%. Therefore, although the share price has not shown significant deterioration, short positions have been increasing consecutively.

The issue is that Hua Hong Semiconductor's call options are even more extreme: trading roughly... 57.5%...at-the-money, with an IV of approximately... 92.6%...and a premium of around 66%, yet the effective leverage is only about 4x. This means that even if your technical analysis correctly predicts a rebound holding above HKD 119, it doesn't mean just any call option is worth buying.

If the stock holds above HKD 119 and breaks back above HKD 122, I would acknowledge a short-term trading opportunity in the underlying stock; however, regarding instruments, I would first compare CBBCs (Callable Bull/Bear Contracts) with near-the-money calls.Having a bullish technical outlook is one thing; being willing to pay for a 90% implied volatility is another.

I'm keen to hear real experiences from retail investors: Has anyone encountered a situation where Hua Hong's underlying stock rose, but the actual gain on their call options was far below expectations?

Pop Mart (9992) $POP MART (09992.HK)$ : The stock price is strengthening, but with a short interest of 36%, this upward trend is worth watching closely.

Pop Mart rose from HKD 154 to HKD 158.7 on August 28, hitting a high of HKD 159.4, with volume of approximately 10.58 million shares; previously, on the 21st, there was a massive volume of 44.11 million shares. The short-term price has reclaimed the HKD 155 level, and the latest technical data shows that the 5, 10, 20, and 50-day moving averages are all below the current price, with the RSI(14) at approximately... 63..., indicating that short-term momentum is strengthening. The 200-day moving average is around HKD 158, so thereforeThe HKD 158–160 range is also a crucial breakout zone.。

Short selling remains elevated. On the 27th, short sales accounted for... 36.4%...of turnover; on the 28th, this ratio dropped to 20.3%. On the 21st, short-selling volume even reached HKD 1.697 billion.

This actually makes Pop Mart more interesting. If the price genuinely breaks above HKD 160 while short interest remains high, conditions for a short squeeze are present. However, if the breakout at HKD 160 fails and the price falls back below HKD 154–155, those short positions may prove correct.

There is a contradiction in the derivatives market: there are 116 bear contracts but only 29 bull contracts, yet trading volume in bear contracts is low. In other words,while some participants are actively shorting in the spot market, retail investors are not heavily using bear contracts to bet on a decline.

Therefore, I am not in a hurry to pick a direction for Pop Mart right now; I am only watching two key levels:A breakout above HKD 160 suggests a potential short squeeze; a breakdown below HKD 154 indicates a failed rebound. This approach is far more useful than simply assuming a bearish outlook based on the high number of bear contracts.

HKEX (0388) $HKEX (00388.HK)$ Technically, this is another stock with a relatively complete setup; HKD 430 is the next hurdle.

HKEX closed at HKD 424 on August 28, with the RSI(14) at approximately 63.6, the 10-day MA around HKD 423, the 20-day MA at HKD 421.6, the 50-day MA at HKD 418, and even the 200-day MA around HKD 407 are all below the share price. This constitutes a relatively well-formed bullish alignment, with a much clearer short-to-medium term trend than that of Alibaba or Meituan.

Therefore, I will first watch whether the HKD 420–422 range can hold;the next significant resistance level to watch is HKD 430; if it breaks through HKD 430, the next target would be HKD 440. Conversely, only if it falls below the 50-day MA at HKD 418 would a re-evaluation of this upward trend be necessary.

Regarding short selling, on August 28, it was approximately HKD 314 million, accounting for 17.7% of turnover,which is higher than the five-day average but not at an extreme level. Furthermore, HKEX has the catalyst of Shein's listing, which is expected to quickly boost activity in short selling, options, and derivative warrants. For the exchange, the true value lies not just in a single IPO, but in whether new listings can foster a subsequent trading ecosystem.

In terms of products, the median implied volatility (IV) for HKEX call options is approximately 23%With an out-of-the-money level of about 8.5% and effective leverage of approximately 11x, it feels much more comfortable than SMIC, Hua Hong, or Xiaomi. Therefore, if the HKEX stock truly breaks through HK$430, I find it to be a pick where......the technical setup and call option terms align well.stocks.

Final summary: Not every bullish outlook warrants buying call options.

So if you were to ask me just one question on Monday, "What is most worth watching," I would categorize them as follows:

Looking to trade the breakout with the trend: Tencent, HKEX.

Betting on a fundamental reversal but requiring technical confirmation: Meituan, Alibaba.

Underlying stocks have narratives, but don't buy products indiscriminately: SMIC, Hua Hong, Xiaomi.

Most worth observing for the bull-bear showdown: Pop Mart.

As for the Hang Seng Index, it remains......best to hold off while it stays between 25,400 and 25,700.。

I have compiled more detailed terms for Calls, Puts, Callable Bull Contracts, and Callable Bear Contracts in “Warrant and Callable Bull/Bear Contract (CBBC) Product Overview”, so if you are selecting products, you can click through to compare them directly.

Finally, I’d like to ask everyone a very practical question:When you engage in short-term trading, do you look at technical levels, news, or the terms of warrants/CBBCs first? If you could only choose one, which would it be?

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