December 11 [BOC Guest] Hang Seng Index, Zijin Mining, Xiaomi Group, CCB

Simon: Hello Niki. Why don’t we talk about the recent situation of Hong Kong stocks? Today’s Hang Seng Index initially rose but then retreated. The market has recently been in a consolidating range-bound pattern. Therefore, aside from monitoring the Hang Seng Index, I would like to ask what changes have occurred in investor sentiment recently. Additionally, I want to ask another question: Are there any particular points to consider when selecting investment products right now?

December 2nd [BOC Guest] Hang Seng Index, Xiaomi, Pop Mart, Zijin Mining, Galaxy Entertainment

Niki, Director of BOC International: Yes, we remember mentioning on our last program that from the end of November to early December, the market indices have been relatively range-bound with narrow fluctuations. This range is roughly between 25,100 and 26,100 points, fluctuating within this approximate 1,000-point band. Today being Thursday (the 11th), we can see that the market has retreated slightly. A few days ago, it fell below 25,500 points, but in fact, during those days, the fluctuation was only around 300 points. Therefore, the current market condition, based on the index, appears to be relatively narrow and subdued overall. You can observe that the turnover of the broader market has been less than HKD 200 billion for several days, while hovering near HKD 200 billion on others. This situation contrasts notably with the earlier period in November, before mid-November, when daily turnover often exceeded HKD 230 billion or even HKD 30 billion. Currently, the trading volume has noticeably decreased, and the broader market as a whole is relatively subdued. Looking at major sectors, there is relatively less news flow compared to the previous earnings announcement season in November, and investors across the board are adopting a wait-and-see approach. Furthermore, with Christmas holidays approaching, Hong Kong will have several public holidays by the end of December; on December 24th (Christmas Eve), the market will only open for half a day. Hence, investors should take note of the market conditions prior to these holidays.

Additionally, regarding the deployment of warrants investments, I’d like to remind everyone that during this period, there is no particularly clear sector-specific direction in the market, and the overall outlook remains unclear. Investors entering the market tend to focus more on index-related instruments, including bull and bear contracts of the Hang Seng Index, or call and put warrants on the Hang Seng Index. For index-based products such as bull and bear contracts on the Hang Seng Index, a 10- to 20-point fluctuation in the index may result in a price change of one or two ticks. Thus, even if the index fluctuates by only 300 to 400 points, it is sufficient for short-term trading. In terms of product selection, I’ve noticed that more investors are participating in these types of index tools, possibly because they lack confidence to enter individual stocks, leaving them in a more观望 (wait-and-see) state. Here, I’d also like to remind everyone that if you choose individual stock warrants, it’s advisable not to buy overly short-term contracts, as holiday factors could impact the implied volatility. If the market remains in a consolidating range-bound pattern with narrow fluctuations, the terms of short-term warrants will be affected by declining implied volatility.

Niki, Director of BOC International:What is the impact of declining implied volatility? If you hold a short-term warrant, whether it’s a call or a put warrant, even if the underlying stock does not move, the price of the call or put warrant will decline as long as the implied volatility drops. So, this is a risk to be mindful of, especially around holidays. I always remind investors to pay attention to this. When choosing products, it’s not that you can’t operate if you’re bullish on a particular stock. However, if you are optimistic, you can opt for products with longer expiration dates. For instance, since it’s currently early December, you might select contracts expiring around March next year, instead of those expiring in January or December, which would pose relatively lower risk.

Simon: Given the current consolidating range-bound market, investors need to be more cautious when selecting contract terms, whether bullish or bearish. There are certainly corresponding products available in the market for both views, but even investors with higher risk tolerance must be aware of the inherent risks of the products themselves.

Simon: Let's discuss individual stocks. The first stock I would like Niki to analyze is Zijin Mining (02899). $ZIJIN MINING (02899.HK)$ You can see that its movement surged close to a recent high point today, but has since retreated somewhat. I would like to ask, regarding 2899, will investors continue to favor its call warrants recently?

Niki, Director at BOC International: Actually, if you pay attention to the commodities sector, you may have noticed that towards the end of every year, international commodity prices tend to perform relatively well. Moreover, yesterday the US officially announced a 0.25 percentage point interest rate cut, which has led to continued relative weakness in the US dollar, further supporting commodity prices. Therefore, during this period, commodity-related stocks, led by 2899, are trading near their recent highs. For instance, 2899 is currently around 33 yuan, having been at approximately 30 yuan at the end of October, before rebounding to this high level. Thus, investors are still focusing on commodity-related products, including 2899 (Zijin Mining). If you are optimistic about it, you might consider the call warrants for 2899. We have one call warrant, 21590, with an exercise price of 48.6 yuan, expiring in mid-April next year, offering leverage of around 7 times. $BIZIJIN@EC2604B.C (21590.HK)$ There are quite a few related commodity products, including Zijin Mining (02899), Shandong Gold (01787), $SD GOLD (01787.HK)$ Zhaojin Mining (01818), $ZHAOJIN MINING (01818.HK)$ Jiangxi Copper Company (00358), $JIANGXI COPPER (00358.HK)$ and others. The terms for these products can be chosen according to your preferences, as detailed information is available on our website. Today we focused on 2899, but if you're interested, you can visit our website,(www.bocifp.com)and choose the stocks you are optimistic about.

Simon: As for other resource stocks, sometimes product information may not be updated promptly. For example, can you call for consultation during market opening hours?

Niki, Director at BOC International: Of course, we welcome calls for inquiries. Before the meeting, my colleague spent an hour talking with an investor whose friend was still unclear about the differences between CBBCs, call warrants, and put warrants, so my colleague explained it in great detail. Therefore, if you have any questions about products or term selection, feel free to call us (Warrant Hotline: 00+852 3988 6909Contact our team, and our colleagues will carefully address your inquiries.

Simon: Let's discuss another stock, 1810 (Xiaomi Group). Many investors have been closely following Xiaomi, and recently, it has rebounded somewhat. Compared to the previous low of HKD 36.6, it is currently in a consolidation phase. I would like to ask, what is the current sentiment among investors in the warrant market regarding Xiaomi?

Niki, Director of BOC International: Regarding Xiaomi, the previously mentioned low around HKD 36.6 is likely the recent bottom. We can see that key executives such as Lei Jun have chosen to increase their holdings, while the company itself is conducting share repurchases. Therefore, there is an expectation that this price range might represent management’s effort to stabilize the stock, making investors feel more confident about entering the market. During this period, we have indeed observed capital inflows into Xiaomi's bullish warrants. For more information, you may refer to the 'Key Data' section on our homepage (www.bocifp.com). Click on 'Top Five Warrant Fund Flows,' select the '5-day' option, and you can see the stocks with the highest capital inflows in the warrant market over the past five trading days.Xiaomi ranks third, with approximately HKD 12 million flowing into its call warrants over the past five trading days.Therefore, we can see that Xiaomi continues to enjoy strong investor support. Today, its stock price is below HKD 40, which is attractive compared to previous rebounds above HKD 42 or HKD 44, drawing significant investor interest.

If you are optimistic about Xiaomi, we offer a product, 15276 (Xiaomi Call Warrant). $BIXIAMI@EC2604D.C (15276.HK)$ The strike price is HKD 57.88, expiring at the end of April next year, with a leverage of approximately 7 times. Additionally, Xiaomi’s put warrants are also worth noting, such as 22168 (Xiaomi Put Warrant). $BIXIAMI@EP2606C.P (22168.HK)$ The strike price is HKD 32.18, expiring at the end of June 2026, with leverage of approximately 5 times.

Simon: BOC International has launched numerous Xiaomi-related products. There are 11 choices for put warrants alone, and even more for call warrants, with over thirty options. Feel free to consult the information on the Bank of China International website and choose products according to your risk tolerance. Of course, as always, if you're unsure how to choose from Xiaomi’s more than thirty call warrants or unclear about the terms, or want to compare products, feel free to call BOC International. Niki and her colleagues will be happy to assist with any questions.

Simon: Before we conclude today, let's have Niki discuss one more stock. This stock has recently experienced a significant decline: 939 (China Construction Bank). We can see that CCB has dropped considerably. Could there be a reversal? Are investors in the warrant market starting to gradually pay attention and accumulate products related to 939?

Niki, Director of BOCI: That's correct. During this period, I've also noticed that a group of Chinese banking stocks previously fell from their highs and have recently reached relatively lower levels. For instance, China Construction Bank (CCB), which previously had a high of over HKD 8, is now trading around HKD 7.5, bringing the share price back to a range similar to late October. Therefore, investors are considering whether this level can stabilize and rebound. Since there has been no significant negative news in the overall market, and with year-end approaching, there is also no particular news affecting the stock prices of Chinese banks. However, the stock prices have retreated relatively quickly, so some investors have started paying attention to call warrants for Chinese banks such as China Construction Bank, China Merchants Bank, and ICBC. Yesterday, I received consultation calls regarding this matter.

Today, I have some time to share with everyone. For example, products related to CCB. The underlying stock price of CCB is around HKD 7 to HKD 8, and products at this price range typically have one-to-one terms. One-to-one means the actual leverage of the product is highly attractive. To give a simple example, CCB call warrant 20915 has an exercise price of HKD 9.8, which is slightly out-of-the-money (exercise price higher than the current stock price). However, the term is not particularly short, as it does not expire until the end of May next year. This CCB call warrant 20915 $BI-CCB @EC2605A.C (20915.HK)$ offers leverage close to 12 times. Previously mentioned Xiaomi or other index call warrants might offer leverage below 10 times, but this CCB product provides very attractive leverage due to its one-to-one conversion ratio. Therefore, if you are optimistic about the market and believe that CCB’s share price will rebound along with the underlying stock, you may consider such products with high leverage and non-short expiration periods, which are suitable for current market conditions. If you think CCB has fallen to around HKD 7.5 and has stabilized at this level for several days, indicating potential support without further downside break, you can use this product as a tool to speculate on a rebound.

Simon: If we refer to some technical signals, in the short term, we can summarize that 939 (China Construction Bank) still shows a 'buy' bias, which can serve as a reference for everyone. Currently, there are eight buy signals and five sell signals. Therefore, relatively speaking, the short-term market sentiment leans towards being more optimistic. You can also refer to some of the products Niki mentioned earlier to see if they align with your expectations. That concludes our sharing session today. First, I’d like to thank Niki for taking the time to explain various insights to us. We hope to have another opportunity next week to discuss other aspects of investment with 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 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.

$Hang Seng TECH Index (800700.HK)$ $Hang Seng China Enterprises Index (800100.HK)$ $TENCENT (00700.HK)$ $XIAOMI-W (01810.HK)$ $JD-SW (09618.HK)$ $HKEX (00388.HK)$ $BABA-W (09988.HK)$ $BILIBILI-W (09626.HK)$ $POP MART (09992.HK)$ $NTES-S (09999.HK)$

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