Sinopec (386.HK) Remains Under Pressure Despite a Promising 3Q Result

Graphic of trading data chart
Sinopec (386), an oil and gas company, announced that 3Q net income jumped to 46.2 billion yuan from 12.0 billion yuan in the prior-year period on revenue of 520.4 billion yuan, down 29% on year. Then, the stock bounces 1.3% after the 3Q result.

However, the stock dropped 35% YTD, while the Hang Seng Index was down around 10% YTD. It shows that the stock is at a very weak position. Besides, the WTI crude oil futures slumped 5.6% yesterday, reaching the 4-month low, on the soaring of coronavirus cases. The decline of oil prices would have a negative effect on the company as well.

From a technical point of view, the company is trading below the overlapping resistance level at HK$3.23 on a daily chart. Both 20-day and 50-day moving averages are still declining. As long as the resistance level at HK$3.23 is not broken, the stock could consider another down leg to the support levels at HK$2.95 and HK$2.70.

However, investors should be aware that the RSI is posting a bullish divergence signal. A break above HK$3.23 would trigger a rebound rebound to the next resistance levels at HK$3.43.


Source: GAIN Capital, TradingView

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