Google, Tesla Earnings Showdown! Is the AI Rally Entering the Second Half? Full Analysis of Hynix, Alibaba, and HK/US Stock Capital Flows

$Alphabet(GOOGL.US) $Tesla(TSLA.US) $BABA-W(09988.HK) $CHINA MOBILE(00941.HK) $HUA HONG GRACE(01347.HK) $ZIJIN MINING(02899.HK)

Program Opening and Market Hotspots Overview

Olga: Welcome to our practical guide for warrant trading today! Our guest today is Coral from Societe Generale. This week's focus includes the rebound patterns seen in Japanese and Korean stocks this morning. Everyone seems quite expectant about the upcoming earnings reports from major US tech companies, hoping they can change the adjustment or market sentiment over the past period. For example, Google might release its earnings soon. Societe Generale has done a commendable job in this area because there are not many issuers of related products in the market, arguably even the only one. Have you deployed capital into these major companies recently (especially regarding warrants)?

US Tech Giants' Earnings Outlook and Warrant Deployment

Coral: Recently, everyone has indeed been paying more attention to the upcoming earnings reports of major US tech companies and what impact this will bring to the market. So we have recently issued some new structured products for deployment, particularly those with medium-to-long term maturities, such as those expiring in December. Warrant prices are influenced by various pricing factors, such as the expiration date and strike price setting, which affect the leverage ratio the product can provide. These types of products can effectively supplement our needs for deploying US stocks during the Asian session. If it's an ETF, the leverage might not be that high; if it's futures, the required capital is higher; whereas warrants allow you to control the invested amount while gaining relatively amplified returns.

This week, mainly Google (GOOGL) and Tesla (TSLA) will report earnings. Taking Google as an example, people are more concerned about how much guidance it gives for capital expenditure (CapEx). The focus of market discussion now is different. Previously, higher capital expenditure meant better expectations for the future; but now the market focuses on whether the business has good cash flow and how to monetize it. We see different giants starting to consider renting out some excess computing power first, such as xAI and Meta (META), both of which have similar operations. Capital expenditure and cash flow guidance will also transmit through the entire AI industry chain, not just representing how much giant enterprises want to develop, but also transmitting to hardware or cyclical industries, such as memory (RAM). During this recent period, market volatility has increased slightly, providing some buying opportunities.

Olga: I agree with your view very much. The market now not only looks at how much money is willing to be spent, but places greater emphasis on how much can be recovered to some extent after spending. If the judgment criteria change, the direction of guidance or answers released by major companies next will have a significant impact on the overall market sentiment (sentiment).

Say hi to friends in the live broadcast group! A friend mentioned that MiniMax rose so much yesterday and fell so much today; a friend with tail number 5926 said semiconductors have finally rebounded, but feels there will be selling pressure later, as many large funds start taking profits. They don't know if it will fall for a period or if there are buyers to take over. It seems everyone is still very concerned about memory/RAM-related stocks. There was news this morning that SK Hynix (SKHY) and Samsung (005930.KS) will meet with NVIDIA (NVDA) in the US, boosting performance. Just talked about Google and Tesla, I want to follow up and ask, Google is recently considered to be slightly lagging behind in Gemini, or inferior to Anthropic in Coding, and even Buffett came out to support their CEO's decision. How do you view Google's deployment before and after the earnings announcement?

Coral: Regarding Google (GOOGL), besides self-developed large models, the growth of cloud business (Cloud) is also a focus, looking at whether its growth rate becomes stronger and faster. This directly reflects whether it can commercialize and monetize AI. Besides developing models, we also need to see if enterprises are willing to pay for services, so cloud business has always been a top priority in the past few earnings guidance sessions. Additionally, we need to see if advertising revenue can benefit from AI tool support to increase income, so the market will have more confidence in its investment.

If you are bullish on Google and want to deploy, besides buying the underlying stock during US trading hours, Societe Generale also has call warrant products, such as (11184), providing about 8x leverage. If you don't wish to invest too much capital in the underlying stock, you can control part of the funds to buy call warrants. If Google rises 1% after earnings, assuming implied volatility and other factors remain unchanged, this product should rise about 7% to 8%, amplifying returns. Some investors choose to deploy ahead of earnings, while others prefer to wait until certainty is higher before buying, such as waiting for tomorrow morning's after-hours earnings and future revenue guidance to come out and feeling stable before buying, which is also a feasible approach.

Olga: This is indeed a solution. Because the impact of volatility often differs before and after earnings announcements. Like Hong Kong stocks, US stocks do not want to overly affect stock prices at the open, so data is usually announced after closing. This coincides well with Societe Generale's provision of US stock products for operation within Hong Kong stock trading hours, making the timing quite good. Everyone can refer to "Performance 1-Day and 5-Day Performance After Announcement" in the US Stock Data Special Zone on Societe Generale's main page. Tesla (TSLA) is also something everyone asks about frequently. Although the focus seems to have been diverted by SpaceX recently, everyone still hopes its earnings will perform well. According to historical records, does Tesla usually fall more after announcing earnings?

Coral: In the previous few times, Tesla's earnings did not bring much surprise because now everyone not only looks at EV delivery volumes but also values how artificial intelligence lands, such as whether autonomous driving (FSD) and Robotaxi can expand operations, or if they remain at the conceptual level, and whether there are new developments in robots (Optimus). If the data does not meet expectations, it may not support the current high valuation.

For this, we have products for both bullish and bearish directions. If you look for short-term explosive gains, you can look at (12134), providing about 8x leverage, expiring in early October, belonging to a short-term tool of about one or two days, not suitable for holding for several weeks. If you are bearish, we have put warrant products, expiring in November, with leverage around 4x.

Olga: Tesla has always been a hot product in the market. An audience member asked, when no one pays attention, could it actually be a more worthwhile investment opportunity? The focus is all on storage/memory stocks. Will Tesla have a chance?

Coral: It depends on whether the price is in a good range suitable for pulling up. As you said, recent focus has been mostly on space stocks or storage stocks, and Tesla has received relatively less capital attention. But it has already fallen significantly from its highs. Tesla's earnings are not easy to predict. Sometimes even if the data is not ideal, if Elon Musk can give the market confidence, the stock price may also reverse. Therefore, deploying after the earnings announcement is also an opportunity.

AI Industry Chain, Memory Sector, and Hynix Analysis

Olga: Will this week's earnings guidance provide inspiration for determining the tone of the AI industry next (such as continuing to hype memory or spilling over to other fields)?

Coral: Absolutely. Current capital expenditure is mainly supported by tech giants and transmits to the entire industry chain: first is upstream GPU chip demand, then transmits to memory (RAM). Previously, memory was a cyclical sector, prone to sudden over-expansion leading to price pullbacks; but this time is different. Year-to-date, memory prices have surged greatly because tech giants have placed huge orders until 2027-2028, extending the cycle.

However, caution is still needed. If memory prices rise too high, transmitting to large model price hikes or excessive price hikes in terminal products like Apple (AAPL) phones, it may form a headwind for AI industry development. In addition to hardware, AI investment will also affect commodity demand, such as copper prices and electricity demand. If demand rises synchronously, price pressure in the commodity market will be amplified, subsequently transmitting to inflation data, pushing prices up.

A friend just asked about Hynix (SKHY. Hynix has a relatively higher premium in the US stock market compared to Korean stocks because the Korean stock capital pool is smaller, while the US stock capital volume is larger. Previously, Hynix-related derivatives in the Hong Kong stock market were a bit overheated, with some investors using leverage. When spot shortages or negative news emerged, it triggered forced liquidation (closing positions), and the decline speed was very fast. But data shows that deleveraging is currently about halfway done, and prices may slowly return to reasonable valuations.

Olga: The characteristic of Korean retail investors' "Ant Army" operating leverage is very strong. On the Hong Kong stock side, everyone felt the power during the deleveraging process. After squeezing out the water and returning to rationality, everyone is waiting for this moment. Regarding US stock earnings, does Cora have anything else to add? Has Hynix issued any related products currently?

Coral: Hynix has not yet issued products; we are still researching and need to conduct research with HKEX (00388) to see if we can launch them later. Hynix is not only a semiconductor hub, but its stock price trend is also an indicator to observe whether AI demand and commercialization pricing are overheating. If call warrants are launched in the future, everyone doesn't need to worry about appearing large premiums or discounts deviating like leveraged ETFs, because we mainly hedge through options, market liquidity is good, and the issue size is fixed.

Hong Kong Stock Capital Rotation, Kimi Concept Stocks, and Chinese Concept Stock Deployment

Olga: Next, let's quickly chat about the AI industry chain and whether there are beneficiary stocks after the appearance of Kimi (Moonshot AI). Netizens also asked about Tencent (00700), Zijin Mining (02899), China Mobile (00941), Hong Kong Exchanges and Clearing (00388), etc.

Coral: First, answering the Kimi part. Many Chinese tech giants own equity or have cooperative relationships with it, such as Alibaba (09988) having a cooperative relationship with it. Therefore, Alibaba's stock price has risen significantly recently. Even though the tech sector adjusted today, Alibaba's drop was not large. Besides performing excellently, Kimi's monetization ability is also beginning to expand into enterprise workflows. Although there are voices in the market worrying about intensified competition or changes in power/data center demand, Kimi experienced overflow on its first day of release, indicating extremely high attention. If commercialization is done well, it can push up market demand for data centers and electricity, forming a mutually reinforcing effect.

Regarding Alibaba (09988), there has been significant capital inflow into long positions today. You can refer to call warrants (13814), with a strike price close to the current price, expiring mid-month, with leverage of about 5x. If you want higher leverage, consider bull certificates (62419), with a barrier distance of about 10%, leverage of about 7x, higher conversion ratio, and cheaper unit price (about 0.03 HKD).

Olga: Alibaba's situation is quite interesting. Recently, well-known overseas investors like Michael Burry are also discussing re-focusing on undervalued Hong Kong stocks/Chinese concept stocks. The Hang Seng Index (HSI) has returned to around 25,000 points seeking support. Although the US may consider restricting Chinese AI models, a negative factor that could negatively impact semiconductor or large model stocks, traditional economic stocks like China Mobile (00941) and HKEX (00388) can be considered for allocation. A friend just asked about China Mobile (00941).

Coral: The telecom stock sector was previously relatively lagging, but started slowly recovering from July. Currently, China Mobile (00941) has returned above the 10-day and 20-day moving averages. Regarding deployment, since China Mobile's volatility is not as large as ZTE (00763) or semiconductor stocks, the barrier price for bull/bear certificates can be selected slightly closer, resulting in very high leverage. For example, bull certificate (60568), with a barrier distance within 10%, has leverage of about 13x.

Olga: Capital returning to "old guard stocks" (traditional heavyweight stocks) like China Mobile and HKEX, will this be a short-term phenomenon?

Coral: Capital flowing into these traditional stocks tends towards medium-to-long-term deployment because daily volatility is not that large. Unlike Tencent (00700) and Alibaba (09988), where capital enters and exits very quickly, bullish capital might take profits the next day and reverse to short positions. From the "Capital Flow" page on our website, we can see that recently, besides taking profits on PCB or large model stocks, some capital has turned into long positions in insurance stocks like China Life (02628) or HSBC Holdings (00005). Tencent and Alibaba's capital often switches quickly between long and short positions.

Popular IPO New Shares and Individual Stock Questions (Hua Hong, HKEX)
Olga: Additionally, a netizen asked if Hua Hong Semiconductor (01347) still has a chance? And will new shares like Zhongji Innolight (300308.SZ) issue derivative products in Hong Kong?

Coral: If there is a large IPO listed in Hong Kong, it might produce a siphon effect attracting capital, and large-cap stocks might consolidate for a period. As for Zhongji Innolight et al., if HKEX includes them in the list of eligible issuables, there will be a chance to launch call warrants in the future.

Regarding HKEX (00388), today's long position capital is also very attentive, and its trend is highly synchronized with the broader market. Due to low implied volatility, call warrants (13813) can reach leverage of around 10x (expiring mid-October, out-of-the-money by about 15%).

Hua Hong Semiconductor (01347) has risen very quickly recently. Bull certificates like (63379), with a barrier distance of about 20%, bid-ask spread of about one tick, leverage of about 5x, have a high safety margin and are not easily knocked out on the same day; for bearish views, bear certificates (61096) have a barrier price of 190 HKD, leverage of about 7x; further bear certificates (60504) have a barrier distance outside 20% (barrier price 208 HKD), leverage of about 4x.

Hedging Sentiment and Commodities (Gold, Crude Oil) Deployment
Olga: Finally, a little time. Today, gold stocks like Chifeng Gold (600988.SH), Lingbao Gold (03330), and Zijin Mining (02899) performed strongly, with significant gains. Has gold hit bottom? A netizen asked about Zijin Mining (02899).

Coral: Gold and commodities like crude oil rose significantly in July. Oil prices are affected by the Middle East situation. If it cannot ease in the short term, July inflation data may be higher, and market expectations for rate hikes/high interest rates may be pulled up again. Regarding gold prices, after hitting bottom twice around the $4,000 level, it rebounded fiercely, driving gold stocks.

Regarding Zijin Mining (02899), we have newly listed call warrants (15050), with leverage of about 4x; Shandong Gold (01787) has call warrants (15266), with leverage of about 3x. If you want to find higher leverage gold directly related products, you can watch Societe Generale's gold futures call warrants (11124), expiring in September, out-of-the-money degree of about 20%, leverage as high as around 14x, suitable for short-term operations; if bearish on inflation and gold prices, put warrants (11100) expire mid-September, leverage of about 6x.

Olga: Societe Generale directly launched products tracking the gold price itself and silver this year, which is very practical for the Hong Kong stock market.

Program Summary and Broad Market Reminder
Olga: Time is almost up, does Cora have anything else to add?

Coral: Thank you, Olga, and everyone for your enthusiastic questions. This week's market trend has been very interesting, rotating from previously crowded minority sectors back to traditional platform stocks and old guard stocks. The Hang Seng Index (HSI) consolidated today and returned below 25,000 points. Market capital showed divergence, with an increase in funds buying short positions. For short position products, you can refer to put warrants (28875), leverage of about 10x, strike price closer to the current price.

Olga: Very good reminder! Thank you, Cora, for bringing wonderful analysis. See you next Wednesday, bye!

Coral: Thanks, bye!