Hang Seng Tries to Find Support from Strong Xiaomi Results
HKG33 Analysis
As rival Apple abandoned it plans to launch an electric vehicle, China's Xiaomi made a successful entry to the market with the SU7 smart sedan. Yesterday's results showed that the firm had delivered more than 27,000 units by the end of the second quarter and reaffirmed its goal to sell 120,000 EVs by the end of the year, which is definitely an impressive figure. Furthermore, the segment was responsible for nearly 10% of Xiaomi's Q2 revenue which came in at RMB 88.9 billion (around 12.5 billion USD). This was up 32% y/y, marking the fastest growth in three years. [1]
The EV entry has helped the company's stock to a profitable year and Wednesday strong quarterly report was cheered by markets, as XIAO.hk jumps around 8% today. Xiaomi is not only a Top-3 smartphone maker globally, but one of the biggest constituents of the Hong Kong benchmark stock Index, so its rise provides support and an opportunity to look past Walmart's sale of its stake in ecommerce and tech giant JD. [2]
HKG33 comes from two profitable weeks, helped by the higher than expected inflation data and Beijing's bolder stimulus, now more focused to revitalizing domestic demand and consumer spending. It reclaims the EMA200 (black line) and tries to surpass the 38.2% of the last leg down. Successful effort would pause the downside bias and bring 18,736 in the spotlight.
However, we are cautious around the ascending prospects. China's recovery remains bumpy, factory activity is subdued, the property sector is in distress, unemployment is high and consumer confidence low. Furthermore, bolder stimulus could further weaken the yuan, exacerbate capital outflows and put further stain on the financials of local governments. Adding to the headwinds, are strained Sino-Western relations, with the trade restrictions and tariffs.
From a technical standpoint, the upside is unfriendly. The falling daily Ichimoku cloud can contain stronger recovery efforts and HKG33 already faces pushback at the pivotal 38.2% Fibonacci. Below it, bearish bias is intact and there is scope for lower lows towards the 16K mark.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
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