Non-ferrous metal stocks surged today (July 29), with the largest and most liquid ETF tracking the sector, Hua Bao Non-Ferrous Metals ETF (159876), climbing as much as 1.45% intraday and currently trading 1.12% higher. Among constituent stocks, Guocheng Mining Co Ltd led gains with a rise of over 5%, while Xingye Silver and Tin Mining Co Ltd and Jintian Copper Co Ltd both advanced more than 4%. In the heavyweight segment, Aluminum Corporation of China Ltd and Shandong Gold Mining Co Ltd gained over 1%, with Zijin Mining Group Co Ltd and China Northern Rare Earth (Group) High-Tech Co Ltd also trading in positive territory.
Looking at a longer timeframe, since hitting an all-time high of 1.380 on January 29, the Hua Bao Non-Ferrous Metals ETF (159876) has corrected 32.33% as of July 28, wiping out all gains made this year. This raises the question: why has the non-ferrous metals sector, which has seen a flurry of positive interim earnings forecasts, failed to see a corresponding price rally? What are the suppressing factors? And can the sector still rise in the future? This article provides a detailed analysis.
Data source: China Securities Index Co. The CSI Non-Ferrous Metals Index's full-year returns for the past five complete years were: 2021, +35.89%; 2022, -19.22%; 2023, -10.43%; 2024, +2.96%; 2025, +91.67%. The index's volatility for the same periods was: 2021, 39.43%; 2022, 31.41%; 2023, 19.44%; 2024, 30.12%; 2025, 27.94%. The index's constituent stocks are adjusted periodically according to the index compilation rules. Past performance does not guarantee future results.
At this juncture, the Index Investment Department of Huabao Fund has released its latest view: it remains optimistic about the non-ferrous metals sector, stating that its medium-to-long-term allocation value remains intact. Currently, the sector possesses three core advantages: tight supply-demand dynamics, low valuations, and clear demand driven by the technology industry trend. After the short-term suppressing factors are fully digested, the sector's right-side allocation value will become prominent.
Reviewing recent market performance, the non-ferrous metals sector has been jointly suppressed by two external factors in the short term. First, ongoing geopolitical tensions in the Bab el-Mandeb Strait and the Strait of Hormuz have pushed international crude oil prices temporarily above $100 per barrel, fueling market fears that runaway oil prices will persistently boost inflation, thereby dampening risk appetite for the non-ferrous sector. Second, the correction in the technology sector has led to a general contraction in market risk appetite, further dragging down the non-ferrous metals sector. However, we observe that commodity prices for copper, aluminum, and tin have not followed suit with significant corrections, and corporate profitability remains unchanged, indicating solid fundamental support.
Core Variable 1: Crude Oil
We judge that the core trading range for crude oil is likely anchored between $70 and $120 per barrel, with the midpoint determined by the convergence of short-term interests between the US and Iran. If oil prices operate within this range for an extended period, their suppressive effect on the non-ferrous metals sector is likely to gradually weaken. For the US, the primary objective for the Trump administration is to win the midterm elections. If oil prices fall to around $70, a conciliatory stance towards Iran would draw bipartisan criticism, and with domestic shale oil industry profitability under pressure, the US would be inclined to escalate geopolitical conflicts to prop up oil prices. Conversely, if oil prices surge to the $100-$110 range, the risk of inflation and economic recession increases, significantly raising the probability that the US will adopt a policy of cooling and controlling prices while moderating its tough stance on Iran. For Iran, the core objectives are securing control over the Strait of Hormuz and ensuring oil revenue. Oil prices below $70 would directly impact fiscal income; while prices firmly above $110 would significantly increase external pressure, leading Iran to proactively seek de-escalation and coordinate with the US's policy approach. A clear dividing line exists in public opinion: below $120, European, Japanese, and South Korean nations are more likely to view Iran as the victim in the US-Iran conflict; if oil prices break above $120, sustained high prices impacting many economies could reverse the narrative, with countries attributing the energy price hike to Iran's control of the Strait of Hormuz, sharply increasing pressure on Iran. Overall, both the US and Iran eschew extreme oil price scenarios, creating a convergence that locks in the current $70-$120 trading range. The probability of oil prices breaking through their previous highs is relatively low. The primary risk stems from the potential for irrational escalation by Israel.
Core Variable 2: Technology
The continuous expansion of AI computing infrastructure, high-end manufacturing, and the new energy industry will provide stable and sustained incremental demand for non-ferrous metals. Viewing this from a long-term industrial perspective, the secular upward trend of the global technology industry is clear. Looking back to the year 2000, the market could not have predicted the industrial transformation and massive market demand brought about by the universal adoption of smart electronic products by 2025. Similarly, standing at the current point in 2026, the market cannot fully anticipate the new industrial forms and vast demand increments that will be generated by AI technology iterations after 2025. The construction of AI and other technology sector infrastructure will drive demand for non-ferrous metals over the long term.
Core Variable 3: Interest Rate Hikes
Moderate interest rate hikes are a short-term suppressant but a medium-to-long-term positive. The key is to examine the underlying real demand for non-ferrous metals. Recent market discussions about a potential Federal Reserve rate hike have been heating up. Current market expectations are for a relatively moderate, slow pace of rate increases. Historical analysis shows that copper prices generally rose during Fed rate hike cycles (with the exception of a sharp correction in June-July 2022 following two consecutive 75 basis point 'jumbo' hikes). The core reason is that moderate rate hikes are a response to an overheating economy, strong manufacturing activity, and an overheated AI investment cycle. The liquidity tightening associated with rate hikes can suppress the non-ferrous metals sector in the short term, but over the medium-to-long term, the commodity attributes (supply-demand fundamentals) of non-ferrous metals will ultimately outweigh the financial attributes (interest rates/dollar). However, caution is warranted regarding the risk of repeated aggressive rate hikes.
In summary, the non-ferrous metals industry currently has a solid fundamental backdrop of supply tightness and demand strength, with the sector trading at historically low valuation levels. This is combined with the clear long-term growth dividend from the global technology industry, creating a triple logic resonance. We maintain our positive view on the non-ferrous metals sector and believe its medium-to-long-term allocation value remains unchanged.
Strong Earnings Outlook + Lowside Consolidation, Rebound Potential
Different non-ferrous metals have varying business cycles, rhythms, and driving factors, making differentiation inevitable. For those optimistic about the non-ferrous metals sector, a simpler approach is to achieve comprehensive coverage to better capture the sector's beta. The underlying index of the Hua Bao Non-Ferrous Metals ETF (159876) and its feeder funds (Class A: 017140; Class C: 017141) covers industries including copper, aluminum, rare earths, gold, lithium, tungsten, molybdenum, and tin. This full-category coverage allows for better capture of the sector's beta. Furthermore, this ETF is available for margin trading and short selling, serving as an efficient tool for a one-click allocation to the non-ferrous metals sector. As of the end of June, the Hua Bao Non-Ferrous Metals ETF (159876) had a net asset value of 1.345 billion yuan and an average daily trading volume of 107 million yuan over the past six months. Among the three ETFs tracking the CSI Non-Ferrous Metals Index in the market, it is the largest and most liquid.
Source: Shanghai and Shenzhen stock exchanges, etc., as of July 29, 2026. Fee Information: When subscribing or redeeming fund shares, the subscription/redemption agent may charge a commission of up to 0.5%. On-exchange trading fees are subject to actual charges by the securities firm. The ETF does not charge a sales service fee.
Risk Warning: The Hua Bao Non-Ferrous Metals ETF (159876) passively tracks the CSI Non-Ferrous Metals Index. The index's base date is December 31, 2013, and it was launched on July 13, 2015. The index's constituent stocks are adjusted periodically according to the index compilation rules. Its back-tested historical performance does not predict future index performance. The constituent stocks mentioned in this article are for demonstration purposes only and do not constitute investment advice of any kind, nor do they represent the holdings or trading activities of any fund under the management company. The fund manager assesses the fund's risk level as R3-Moderate Risk, suitable for balanced (C3) and above investors. Please refer to the sales institution for suitability matching opinions. Any information appearing in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, or any form of expression) is for reference only. Investors must be responsible for their own autonomous investment decisions. Furthermore, any views, analyses, or forecasts in this article do not constitute investment advice to readers of any kind, and no liability is assumed for any direct or indirect losses arising from the use of this content. Fund investment carries risks. Past performance of a fund does not represent its future performance. The performance of other funds managed by the fund manager does not constitute a guarantee of the fund's performance. Fund investment should be undertaken with caution.
Comments