The non-ferrous metals sector has posted significant gains for a second consecutive day. Following a 4.75% rise yesterday, the on-market price of the largest and most liquid* ETF tracking the sector, Huabao Non-ferrous Metals ETF (159876), surged another 3.29%, decisively reclaiming its 10-day moving average.
Among its constituents, Shanjin International Gold Co.,Ltd. hit the daily 10% limit-up. Shares of Shengtun Mining, Western Mining, Chifeng Gold, and Xingye Yinyin also touched the limit-up price during the session, closing with substantial gains of 9.18%, 7.76%, 7.72%, and 7.12% respectively. Key weighted stocks also performed strongly, with Zijin Mining Group rising over 6%, China Molybdenum Co., Ltd. gaining more than 4%, and Aluminum Corporation of China advancing nearly 3%.
Key Drivers Behind the Sector Rally
Two primary factors are driving the current surge in the metals sector.
Firstly, on the macroeconomic front, U.S. inflation data for June, including both CPI and PPI, came in below expectations, leading to a sharp decline in market expectations for further Federal Reserve interest rate hikes. According to the CME FedWatch Tool, maintaining current rates at the upcoming FOMC meeting (July 28-29) has become the market's baseline expectation.
Secondly, regarding corporate performance, as of July 21st, all 39 constituent companies of the Huabao Non-ferrous Metals ETF (159876) index that have announced their 2026 interim results forecasts are expecting both profitability and growth. Zijin Mining Group leads with a projected highest net profit attributable to shareholders of 39.1 billion yuan, followed by China Molybdenum Co., Ltd. and Aluminum Corporation of China with forecasts of up to 16.5 billion yuan and 12.2 billion yuan, respectively.
A notable development is the return of spot gold to the $4,100 per ounce level. The strength in the international gold price is attributed to continued active purchases by global central banks and heightened safe-haven demand due to renewed geopolitical tensions in the Middle East. Analysis suggests that gold prices were severely oversold following recent conflicts. Currently, gold stocks offer strong safety margins in terms of both P/E ratios and resource valuation ratios. If expectations for rate hikes are fully revised, gold prices could potentially rebound to the $4,500-$5,000 per ounce range, with the gold sector benefiting from a simultaneous recovery in profit expectations and valuation levels*.
The Index Research and Investment Department of Huabao Fund noted that the industrial and precious metals sectors had been oversold, previously suppressed by high oil prices stemming from geopolitical tensions and a correction in the technology sector. Overall, the factors that led to the sector's correction since March may have largely dissipated. Current stable commodity prices support corporate earnings, and leading companies still have volume growth contributing to profits, resulting in high certainty for sector profitability. The combination of low valuations and high growth certainty presents a favorable window for allocating to the non-ferrous metals sector.
Strategic Approach to Sector Exposure
Given the varying cycles, drivers, and performance across different metals, a diversified approach can be an effective strategy to capture the broader sector's beta. The Huabao Non-ferrous Metals ETF (159876) and its feeder funds (Class A: 017140, Class C: 017141) track an index that comprehensively covers sectors including copper, aluminum, rare earths, gold, lithium, tungsten, molybdenum, and tin. This broad coverage allows for better capture of the sector's overall trend. Furthermore, as a securities lending and borrowing target, this ETF serves as an efficient tool for gaining exposure to the non-ferrous metals sector.
As of June 30, 2026, the Huabao Non-ferrous Metals ETF (159876) had a size of 1.345 billion yuan, with an average daily turnover of 107 million yuan over the past six months. Among all ETFs tracking the CSI Non-ferrous Metals Index, it is the largest and most liquid.
It should be noted that the fund's previous on-market abbreviation was 'Color Leader ETF'.
*Institutional view reference source: A report published on July 6th titled "Gold Bottom: Anticipating a Double Boost from Valuation and Earnings."
Investors should be aware that subscription and redemption agents may charge a commission of up to 0.5% when processing fund share subscriptions or redemptions. On-market trading fees are subject to the rates set by securities firms. The ETF does not charge a sales service fee.
Risk Disclosure: The Huabao Non-ferrous Metals ETF 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. Its constituent stocks are adjusted according to the index methodology. The index's past performance is not indicative of its future results. The mention of constituent stocks herein is for illustrative purposes only and does not constitute investment advice of any form, nor does it represent the holdings or trading intentions of any fund managed by the asset manager. The fund manager assesses this fund's risk level as R3 (Medium Risk), suitable for investors with a Balanced (C3) or higher risk profile. Suitability matching opinions should be based on the assessment of the selling institution. Any information appearing in this content is for reference only. Investors are solely responsible for their independent investment decisions. Furthermore, any views, analysis, or forecasts herein do not constitute investment advice to readers and no liability is accepted for any direct or indirect losses arising from the use of this content. Fund investment carries risks. A fund's past performance does not guarantee its future results. The performance of other funds managed by the same manager does not constitute a guarantee of this fund's performance. Invest with caution.
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