ADR divergence in the overnight futures market, Hang Seng Index expected to test the 50-day moving average

The Hang Seng Index (HSI) opened lower on Thursday and had a volatile but slightly weaker performance. It dropped to 19,030.39 points at 11:09 before stabilizing. The HSI rebounded in the afternoon but softened after reaching 19,315.17 points at the close. The index had a daily range of 284.78 points with a trading volume of 81.086 billion yuan. The HSI, CSI 300, and HSTECH indexes rose by 0.01%, 0.23%, and 0.1% respectively.

Chuangke Industrial (0669) announced a mid-year revenue of $6.879 billion in 2023, a decrease of 2.2% year-on-year. Shareholders' attributable net profit was $476 million, down 17.7% year-on-year. Chuangke Industrial's stock price fell by 17.026%, experiencing the largest decline among blue-chip stocks. China Unicom (0762) reported a mid-year operating revenue of 191.8 billion yuan in 2023, an increase of 8.8% year-on-year. Net profit attributable to the parent company reached 5.4 billion yuan, up 13.7% year-on-year. China Unicom's stock price rose by 3.279%, marking the highest increase among blue-chip stocks.

The Hang Seng Index showed a second consecutive day of gains and closed with a "spinning top" formation, maintaining levels above the 50-day Simple Moving Average (SMA). The MACD bearish divergence widened, continuing to contrast with the Hang Seng Index. There were 715 advancing stocks and 888 declining stocks throughout the day, indicating that the overall market conditions were not as strong as the index, somewhat hinting at a bearish sentiment.

The U.S. Consumer Price Index rose by 0.2% in July, the same increase as in June, meeting market expectations. On an annual basis, the inflation rate rebounded to 3.2%, slightly below market expectations. Investors anticipate that the Federal Reserve may keep interest rates unchanged during its September 20th policy meeting. The three major U.S. stock indices rebounded and closed higher.

Futures prices rose while American Depository Receipts (ADRs) declined, showing a divergence between the two. It is expected that the index will continue to struggle around the 50-day SMA level, approximately 19,212.

Yanzhou Coal Mining (1171) is primarily engaged in investment holding, coal mining, and coal railway transportation services.

In the first quarter of 2023, the group achieved operating revenue of RMB 44.421 billion, an increase of RMB 3.22 billion or 7.8% YoY. The net profit attributable to shareholders of the listed company was RMB 5.652 billion, a decrease of RMB 1.025 billion or 15.3% YoY.

According to media reports, the fourth round of price hikes for coke has been fully implemented. Wet quenching coke has been raised by 100 yuan per ton, and dry quenching coke has been raised by 110 yuan per ton. The profitability of coke enterprises is gradually improving, supported by strong demand for raw materials. At the same time, production disruptions in coal mines at the source have not been fully resolved, and coal inventories remain low. Coupled with the expectation of a recovery in the real estate chain brought about by recent high-level meetings, the sentiment in the dual coke market is further boosted, leading to stable and upward pressure on coke prices. The company is expected to benefit from the improvement in the industry's outlook.

The company's stock price has recently shown positive performance and signals in the financial technology system. The company's valuation is at the industry average level and deserves attention. If valued at a P/E ratio of 3, the target price would be 13.79 yuan.

The author is a licensed individual of the Hong Kong Securities and Futures Commission and does not hold the aforementioned shares. The above article represents personal opinions.