Venezuela's Oil Production Outlook: JPMorgan predicts that Venezuela's oil production could drop by 50% following Nicolas Maduro's departure, but may rebound to 1.4 million barrels per day within two years and reach 2.5 million barrels per day in a decade if stability is restored.

Impact on Chinese Oil Companies: Venezuelan crude, which constituted 4% of China's oil imports in 2025, is primarily processed by small refineries, meaning the impact of losing this supply on major companies like SINOPEC and PETROCHINA will be limited due to US sanctions.

JPMorgan's Stock Ratings: The firm is optimistic about PETROCHINA due to its successful diversification into natural gas, while SINOPEC is rated Neutral due to weak short-term earnings prospects.

Market Conditions for Oil-Based Stocks: Lower oil prices and favorable interest rates may accelerate the recovery of oil-based chemical stocks, with HLGF receiving an Overweight rating from JPMorgan.

Market Overview: The Hang Seng Index (HSI) closed slightly up by 8 points at 26,347, while the Hang Seng China Enterprises Index (HSCEI) fell by 20 points to 9,148, with a total market turnover of $283.46 billion.

Top Gainers: Notable gainers included Kuaishou-W (+11.1%), Innovent Bio (+6.1%), and Beigene (+5.3%), while heavyweights like Ping An and Alibaba also saw increases of 2.7% and 2.6%, respectively.

Significant Declines: Major declines were observed in XPeng (-4.6%), Yum China (-3.3%), and PetroChina (-3.5%), indicating a mixed performance among stocks.

Short Selling Activity: High short selling ratios were noted for several stocks, with Kuaishou-W and XPeng having ratios of 12.093% and 30.532%, respectively, reflecting investor sentiment and market volatility.

US Military Action: The US military captured Venezuelan President Nicolas Maduro, prompting discussions about increased investment in Venezuela's oil industry by American companies, as urged by President Donald Trump.

Impact on Oil Prices: BOCI's research report indicated that Trump's call for investment could lead to a potential doubling of Venezuela's oil output to 2 million barrels per day, which may negatively affect short-term oil prices.

Market Response: BOCI maintained a Neutral rating on the Chinese oil industry, anticipating that companies like PETROCHINA may experience short-term selling pressure due to these developments.

Short Selling Data: As of January 5, 2026, PETROCHINA faced significant short selling, with a ratio of 20.126% and a total short selling amount of $261.05 million.

Market Overview: The HSI fell 21 points to 26,316, while the HSCEI and HSTECH also experienced declines, with total half-day turnover reaching $155.515 billion.

Stock Movements: BLUEFOCUS and KUAISHOU saw significant gains of 9.5% and 9.7% respectively, while major automakers like GEELY AUTO and BYD COMPANY faced losses between 2.4% and 3.1%.

Oil Sector Impact: Concerns over Venezuela's situation led to declines in oil producers CNOOC and PETROCHINA, which dropped 3.5% and 4.3% respectively.

Financial Sector Performance: HSBC and AIA inched up slightly, while Chinese insurers like PING AN and CPIC saw gains of over 3%, contrasting with declines in major Chinese banks.