Hang Seng Tech Has Arrived? Money rotates from US to China?
The Hang Seng Tech Index $HSTECH(HSTECH)$ has been consolidating within the broader Hang Seng Index $HSI(HSI)$ since February 14, 2022 (Happy Valentine’s Day!). Last week, it successfully broke out with a strong upward move, clearly surpassing the consolidation range and closing above the 200-week EMA.
Actions:
1. Holding Position $BABA-W(09988)$ $Alibaba(BABA)$ :
I am not increasing my allocation to Alibaba, as I already hold a 25% position, and the RSI is approaching overbought levels. I am also not selling or considering selling covered calls. I am mentally prepared to stay on the sidelines as we approach the February 20 earnings report. I expect strong earnings and bullish guidance, but I will avoid making any moves for now.
2. Initiating and Scaling Position in NIO $NIO Inc.(NIO)$ $NIO-SW(09866)$ :
I have started a position in NIO and plan to add aggressively, as it remains one of the few tech names still consolidating. On January 30, 2025, NIO announced the repurchase of $378.3 million of its convertible senior notes due 2027, which reassures me about their financial stability and confidence. While the recent January sales data (up 40% year-over-year) might seem like a distraction due to seasonally weak holiday sales, I remain focused on the bigger picture. I anticipate NIO might perform a liquidity sweep to flush out stop losses before moving higher, similar to Alibaba’s recent price action. However, I am not waiting for that to happen before adding to my position
Additional Observations:
I’ve noticed an interesting divergence in stock prices between asymmetric Chinese and U.S. companies. Could this signal a rotation play from the U.S. market to China? $Invesco QQQ(QQQ)$ $SPDR S&P 500 ETF Trust(SPY)$ $KraneShares CSI China Internet ETF(KWEB)$
1. $BYD COMPANY(01211)$ up; $Tesla Motors(TSLA)$ down
2. $Alibaba(BABA)$ up; $Amazon.com(AMZN)$ down
3. $SMIC(00981)$ up; $Taiwan Semiconductor Manufacturing(TSM)$ down ( lesser )
4. $LENOVO GROUP(00992)$ up; $Dell Technologies Inc.(DELL)$ down
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