Hang Seng Index shows a 'pregnant' pattern with strong wait-and-see sentiment
Hang Seng Index Shows 'Pregnant Woman' Pattern, Market in Wait-and-See Mode
By: Cen Zhiyong, Analyst at Wutong Research Institute
On Monday, the Hang Seng Index opened 92.52 points higher but softened in early trading, hitting a daily low of 25,920.27 at 10:38 before rebounding. It retreated again after reaching the 26,060 level. In the afternoon, the index followed the upward trend of A-shares, peaking at 26,217.12 at 14:07 before slightly softening to hover around 26,160. The day's fluctuation was 296.85 points. The Hang Seng Index closed at 26,158.36, up 251.71 points or 0.97%, with a turnover of HK$228.676 billion. The HSCEI and Hang Seng TECH Index rose 0.98% and 0.24%, respectively; all three indices performed well, with the HSCEI showing the best momentum.
The Hang Seng Index opened higher and closed with a bullish candlestick, reclaiming the 50 SMA (around 26,056) and 10 SMA (around 26,092) but capped by the 20 SMA (around 26,163). Combined with the previous trading day's trend, it formed a 'Pregnant Woman' pattern, indicating potential change. The MACD bullish divergence widened slightly, with 1,004 stocks rising and 882 falling, reflecting an overall positive market sentiment.
Construction Bank (0939), Xiaomi (1810), and ICBC (1398) rose 3.117%, 3.519%, and 2.492%, respectively, contributing to the HSCEI's upward momentum.
OPEC+ announced after an online meeting that it would pause production increases from January to March next year, citing seasonal factors. The news boosted oil prices, with CNOOC (0883) and PetroChina (0857) rising 3.49% and 3.367%, respectively, also among the better-performing HSCEI constituents.
On November 1, the Ministry of Finance and the State Taxation Administration issued the "Announcement on Tax Policies Related to Gold," clarifying policies to guide standardized and regulated gold trading through VAT incentives. The news weighed on gold jewelry stocks, with Lao Feng Xiang (6181), Luk Fook Group (0590), and Chow Sang Sang (0116) falling 7.16%, 6.91%, 6.1%, and 3.23%, respectively. Chow Tai Fook (1929) and Chuanghui Jewelry (8537) also dropped 8.67% and 4.19%.
The U.S. Manufacturing PMI fell to 48.7 in October, below September's 49.1, marking eight consecutive months of contraction at an accelerating pace. The three major U.S. stock indices diverged, with the Dow falling while the Nasdaq and S&P rose.
Night futures fell while ADRs rose, showing divergence. The Hang Seng Index is expected to fluctuate with a soft bias, with support at the 26,000 level.
Stocks
Baiyunshan (0874) is primarily engaged in: (1) R&D, manufacturing, and sales of Chinese and Western pharmaceuticals, chemical APIs, natural medicines, biologics, and chemical intermediates; (2) wholesale, retail, and import/export of Western and Chinese medicines and medical devices; (3) R&D, production, and sales of health products; and (4) investments in healthcare services, health management, wellness, and elderly care.
The group recently reported its Q1-Q3 2025 results, with revenue of RMB61.606 billion, up 4.31% YoY, and net profit attributable to shareholders of RMB3.31 billion, up 4.78% YoY. Basic EPS was RMB2.036. For the first three quarters, revenue rose 4.31% YoY to ~RMB61.605 billion, while net profit increased 4.78% YoY to ~RMB3.31 billion.
The group's health business is supported by Wong Lo Kat herbal tea, a leader in China's herbal tea industry. The group is actively expanding overseas markets for Wong Lo Kat, launching the international brand "WALOVI" in 2024. The brand has been rolled out in the U.S., Thailand, Italy, Saudi Arabia, Malaysia, and other countries, focusing on Southeast Asia and North America. It has deepened collaboration with Costco and Amazon to expand overseas opportunities.
Wong Lo Kat Health, a subsidiary of Baiyunshan, was invited to the Fortune Global Forum, where it held the launch ceremony for WALOVI International Cans in Saudi Arabia, marking its official entry into the Middle East market.
Recently, the group's stock has performed well, with signals appearing in fintech systems. Its current P/E ratio is 10.281x, relatively low among peers, warranting attention.
The author is a licensed SFC professional and does not hold the aforementioned stocks. The views expressed are personal and do not constitute investment advice.
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