Both investors and traders continue to focus on North Asia, in particular the Chinese tech stocks listed in Hong Kong.
The Hang Seng Tech Index closed at a three-year high of 5,526 and the locally-listed Lion-OCBC Securities HSTECH ETF (HSTECH), which ended the week of Feb 10-14 at 92.3 cents, is at the highest level in more than a year.
Although the Hang Seng Tech Index’s smoothed RSI is near the top end of its range, the index itself is still way below its all-time high of 10,945, attained in February 2021. Nonetheless, the speed at which the rally in the index and HSTECH has taken place is breathtaking. Accelerated rises are unlikely to be sustained and a retreat for both index and ETF is overdue.
HSTECH has met its upside target of 90 cents following a breakout from a minor base formation at 81 cents. Similarly, short-term indicators are at the top end of their range. The sharp and accelerated rise in share prices suggests that the ETF is likely to run into resistance and head for a consolidation soon.
HSTECH has been at higher levels. When it first started trading in 2021, prices were above $1.33 but retreated subsequently in 2021 and 2022. A two-year base formation took place in 2023 and 2024, with prices breaking out in 2025. The temptation to get more bullish as prices rise is intrinsic market behaviour. Interestingly, the break above 88 cents indicates an upside of $1.20. This also means that the 88 cents level should be seen as a support/breakdown, below which the upside is no longer valid.
Usually, in a bull market, after the leaders (in this case HSTECH) have broken out and run up, laggards should start to move. The Lion-OCBC China Leaders ETF, which mirrors the moves of the largest 80 stocks on the Stock Connect, appears poised for a break above the thrice-tested resistance at $1.78. Volume has expanded, suggesting that a breakout should materialise. A successful breakout indicates an upside of $1.95.
See also: Investors on DeepSpeed to China with HSTECH
The Straits Times Index kept within its trading range, gaining 16 points week-on-week to end at 3,877 on Feb 14. A breakout above the current trading range of 3,882 to 3,900 should also Lomaterialise, the STI’s next upside at 4,100.
Source: Maybank Trade
