Hong Kong stocks are rebounding—what sectors deserve attention?

港股窩輪Jenny

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HK Warrants Notes | Hang Seng Index holds above 25,000; after sharp semiconductor rally, product terms now matter more than direction

On the surface, Hong Kong market indices didn’t move much today, but underlying market divergence was actually quite evident.

Hang Seng Index $Hang Seng Index (800000.HK)$ closed at 25,132 points, closing down slightly by 0.04% for the day, yet still holding above the 25,000 level and near the 60-day moving average (MA60); the Hang Seng Tech Index rose 1.32%, marking its second consecutive gain and breaking above MA60. While one index consolidates, individual stocks have already shown clear sector rotation, with semiconductors, resource stocks, and some financials each moving to their own rhythm.

Therefore, if you only looked at index movements today, it would be easy to underestimate volatility in the individual stock warrants market.

Hang Seng Index: 25,000 remains the key short-term support/resistance level

Yesterday, the Hang Seng Index reached an intraday high of 25,254 points, with an intraday low of 24,991 points, and closed above the 25,000 mark.

On the daily chart, this rebound starting from 22,518 has already accumulated significant gains. The middle band of the Bollinger Bands is around 23,870, with the upper band near 25,394—placing the Hang Seng Index in a resistance zone close to the upper band. Additionally, the short-term RSI has risen to approximately 71.7, indicating momentum remains intact, though upside risks are increasing.

We will first monitor several key levels:

The major concentration zone for Hang Seng Index bull warrants is between 24,100 to 24,299 points, the major bear warrant strike zone is at 25,300 to 25,499 points. In other words, the current price is already quite close to the bear warrant concentration zone on the upside, while the bull warrant concentration zone remains significantly farther away.

This structure warrants attention.

If the HSI breaks above 25,250 and further challenges 25,400, the bear warrant strike zone will become a market focal point. Conversely, if the index falls below 25,000, bull warrant positioning will need to be reassessed—particularly products with closer call-back prices.

In terms of street inventory, Hang Seng Index call open interest dropped by 8.93% in a single day, while put open interest rose by 17.44%; bull warrant street inventory declined by 14.85%, and bear warrant street inventory increased by 19.82%. These figures reflect lagging position data from the previous trading day, yet they still indicate that short positions or hedging activities are starting to accumulate near current highs.

At this stage, the key consideration for Hang Seng Index bull and bear warrants is not simply which product offers the highest leverage, but rather:

– For bullish positioning, avoid call-back prices too close to 25,000;

– Bearish positions should wait for resistance signals between 25,250 and 25,400 points;

– If the index merely trades sideways at high levels, both call and put products are vulnerable to being eroded by volatility.

Semiconductors: SMIC and Hua Hong surged sharply, but products shouldn't just chase the highest leverage.

The semiconductor sector remains the most standout today.

SMIC rose 8.24%, marking two consecutive gains and breaking above the 5-day moving average (MA5); Hua Hong Hongli gained even more, 17.91%, breaking above both MA5 and MA60, and approaching MA10.

SMIC $SMIC (00981.HK)$

SMIC closed at HK$75.50, with a near-term focus on whether it can break through HK$77.

In terms of open interest, call warrants declined by 1.59%, while put warrants have fallen for seven consecutive days. Bull warrant open interest dropped sharply by 55.80% in a single day, whereas bear warrant open interest increased by 7.44%. This structure doesn't necessarily indicate a bearish market shift; it's more likely that existing bull warrant positions have already significantly exited during the sharp rally, and some capital has started positioning for a pullback.

Major concentrations of SMIC bull warrants are at HK$65 and HK$65.95, the major bear warrant strike zone is at HK$85 to HK$85.95Both sides are not very close to the current price, indicating that the main positions are concentrated at levels with more cushion.

For those bullish on SMIC, after a sharp rally, it’s unwise to only look for the most tightly priced bull certificates. If the underlying stock fails to break above HK$77, high-leverage products could easily suffer from pullbacks first. If choosing call warrants, pay special attention to moneyness, time to expiry, and implied volatility—it’s not guaranteed that the product will respond favorably just because the underlying stock rises.

Hua Hong Hongli $HUA HONG GRACE (01347.HK)$

Hua Hong surged nearly 18% in a single day—stocks like this are most prone to situations where you correctly predict the direction, yet the derivative products may still underperform.

Street inventory of bull certificates dropped sharply by 59.49%, while bear certificates rose slightly by 2.40%; the main concentration zone for bull certificates is at HK$120 to HK$124.9, while the concentrated bear warrant strike zone is at HK$250 to HK$254.8。

The current price is quite far from both concentration zones, so in the short term, the key level to watch is whether the breakout around HK$171.60 can be sustained. If the stock merely consolidates at high levels, product prices could be adversely affected by both implied volatility and bid-ask spreads.

Therefore, the approach to selecting Hua Hong derivative products shouldn’t be ‘buy the highest leverage just because it rose the most,’ but rather prioritize control over:

– Moneyness (in-the-money vs. out-of-the-money);

– Expiry date;

– Bid-ask spread;

– Whether the product still maintains sufficient sensitivity when the underlying stock pulls back.

Resource stocks: Zijin Mining shows a more complete uptrend, while Jiangxi Copper exhibits a sharper surge.

Zijin Mining rose 4.65%, marking two consecutive gains and approaching the upper Bollinger Band. In terms of open interest, Calls fell by 3.38%, Puts declined for five straight days, Bull Certificates dropped 9.47%, and Bear Certificates plunged 32.49%. This pattern suggests traders are reducing positions on both sides during the rally, rather than significantly increasing bets in one direction.

The major concentration zone for Zijin Mining bull certificates is at HK$26 to HK$26.98, the major bear warrant strike zone is at HK$35 to HK$35.98。

Currently trading at HK$31.52, the near-term focus is whether it can break above HK$31.94. If it breaks and holds above this level, bullish products are better positioned to extend gains; if resistance appears near the upper Bollinger Band, beware of a pullback toward HK$30.44.

Jiangxi Copper surged 7.65%, breaking through its 5-day, 10-day, 20-day, 30-day, and 250-day moving averages all at once. In terms of open interest, Calls fell 2.60%, while Puts rose for three consecutive days, up 11.44% in a single day.

Between these two resource stocks, Zijin Mining shows better trend continuity, whereas Jiangxi Copper reflects a more abrupt breakout. In selecting derivative products, for Zijin Mining, closer attention should be paid to the knock-in distance of Bull Certificates; for Jiangxi Copper, greater emphasis should be placed on whether Call Warrants are too far out-of-the-money and whether implied volatility has already become elevated following the sharp rally.

Financial stocks: Ping An shows a smoother uptrend, while China Life remains in a rebound phase.

Ping An rose 0.99%, posting two consecutive gains and breaking above the upper Bollinger Band; China Life gained 0.66%, also rising for two days and reclaiming its 5-day moving average. Both stocks advanced, but their price structures differ.

Ping An $PING AN (02318.HK)$

Ping An put warrant open interest rose 16.17%, with bear certificates posting consecutive increases for two days, surging 18.22% in a single day; call and bull warrant open interest declined. This suggests growing short positions or hedging activity near current high levels.

Major bull warrant open interest concentration zone is at 38 to 38.98 HKD, the major bear warrant strike zone is at HK$59 to HK$59.95。

The current price is HK$56.25, significantly closer to the key concentration zone of bear certificates. If the price breaks above HK$57 in the short term, the range between HK$59 and HK$59.95 will gradually become an important risk zone. However, if resistance holds near HK$57, bearish positioning would be more justified.

China Life Insurance $CHINA LIFE (02628.HK)$

China Life call warrant open interest has risen for four consecutive days, and bull certificates for three days; put warrant open interest declined, with bear certificates falling for three straight days—down 38.63% in a single day. These patterns suggest the market is gradually positioning for a rebound.

However, the stock’s performance over the 5-day, 10-day, and 20-day periods remains relatively weak, so this move should still be viewed only as a rebound rather than a confirmed medium-term trend reversal.

Major bull warrant open interest concentration zone is at HK$23 to HK$23.98, the major bear warrant strike zone is at HK$32 to HK$32.98。

In the short term, watch whether the price can break above HK$27.82. Until that happens, bullish products should still be used only for rebound plays. A drop below approximately HK$27.16 would strengthen the case for bearish positioning.

Summary of Today's Product Strategy

Today, the market can be divided into three groups:

Open interest data should still be treated only as a lagging indicator of positioning, especially for stocks like semiconductors that experience large intraday swings—the underlying stock’s structure today may already differ significantly from the moment the open interest statistics were recorded.

When actually selecting warrants or bull/bear certificates, we evaluate in the following order:

1. Whether the underlying stock or index has broken through a key level;

2. Whether the product's call price or exercise price is reasonable;

3. Whether the increased leverage comes with excessive risk;

4. Whether implied volatility and bid-ask spreads have already widened;

5. Whether the open interest concentration zones reflect only historical positions, not intraday directional signals.

Our compiled "Warrants and CBBC Product Overview"compares the risk-reward ratios, support/resistance levels, call/put warrants, and bull/bear contract terms for the Hang Seng Index and several key stocks, helping you identify which products best suit your market view.

We remind you to download the "Warrants and CBBC Product Overview"to access more analysis on the Hang Seng Index and individual stocks, as well as reference information on warrants and CBBCs.

Overview of Warrants and CBBCs

Today, are you more focused on whether the Hang Seng Index can break through the 25,400 level, or on the product-related risks following the sharp rallies in SMIC and Hua Hong?

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