On Tuesday (August 6), the nonferrous metals sector saw a volatile session, rallying after an initial pullback. The Huabao Fund Nonferrous Metals ETF (159876), which tracks the same underlying index and boasts the largest scale and best liquidity among its peers, surged as much as 2.45% intraday before closing 0.92% higher. Looking at the daily chart, since hitting its year-to-date low of 0.831 on July 20, the ETF has established a pattern of volatile upward movement.
Driven by strong fundamentals and low valuations, capital is actively positioning for a rebound from oversold levels. The Huabao Fund Nonferrous Metals ETF (159876) saw net inflows of 15.6 million units throughout the day. This follows three consecutive days of net capital inflows totaling 59.01 million yuan previously. Over a longer timeframe, the ETF has attracted a cumulative 176 million yuan in the past 10 trading days.
Among its constituent stocks, the "indium" concept stock Yunnan Germanium hit its daily limit up for the third consecutive session, while the semiconductor material concept stock Youyan New Materials achieved its second consecutive limit-up. Tungsten industry leaders saw gains, with Xiamen Tungsten rising over 6% and Zhangyuan Tungsten gaining more than 4%. Gold sector leaders also performed well, with Western Gold climbing 6% and Shanjin International advancing over 5%.
On the macroeconomic front, the U.S. July ADP (often called "small nonfarm") employment data released on the evening of August 5 showed only 44,000 new jobs, significantly below the market expectation of 75,000. The clear cooling of the labor market alleviates pressure on the Federal Reserve to raise interest rates further, substantially boosting market expectations for monetary easing. In response, international spot gold prices broke through the $4,300 per ounce mark intraday, reaching a new high since June 18. Gold's bullish momentum is re-consolidating, driven by a triple convergence of technical breakout, central bank purchasing, and a shift in macroeconomic expectations. Citic Securities believes that gold prices are likely to re-enter an upward channel within the year.
On the industry front, the CEO of overseas optical communications leader Lumentum stated that the supply-demand gap for Indium Phosphide (InP) has now surpassed that of DRAM and NAND, making it one of the most critical constraints for the expansion of optical interconnects in AI data centers. The A-share Indium Phosphide concept stock Yunnan Germanium hit its daily limit up for the third consecutive day. China Galaxy Securities suggests that the strategic importance of InP has already escalated from being an "optical communication substrate" to a "bottleneck link for AI infrastructure."
From a valuation perspective, the current nonferrous metals sector offers a strong margin of safety. First, in a cross-sector comparison within the Shenwan first-level industry classification, nonferrous metals' PE (TTM) is in the middle-to-lower range, indicating significantly less valuation pressure compared to most other sectors. Second, looking at historical trends, the PE of the CSI Nonferrous Metals Index is near its three-year median, suggesting it has not excessively priced in future growth expectations. Third, in an international comparison, taking A-share Zijin Mining and the U.S.-listed Southern Copper as examples, Zijin Mining's valuation is notably lower than Southern Copper's, highlighting a significant global pricing discount for A-share nonferrous metal leaders. Given the strong fundamentals and low valuations, the Huabao Fund Index R&D Investment Department recommends focusing on the right-side allocation value of the sector.
Comprehensively, the negative factors that have pressured the sector's pullback since March appear to have been largely eliminated. Current commodity price stabilization supports corporate profitability, and leading companies still have volume growth contributions, resulting in high earnings certainty for the sector. Low valuations combined with high growth potential make the current period an attractive allocation window for the nonferrous metals sector.
Strong Earnings Forecasts and Low-Level Consolidation: A Rebound from Oversold Conditions is Anticipated!
The performance, rhythm, and driving factors vary across different nonferrous metals, making divergence inevitable. For investors bullish on the sector, a relatively straightforward approach is to use full coverage to better capture the sector's beta. The underlying index for the Huabao Fund Nonferrous Metals ETF (159876) and its linked funds (Class A: 017140, Class C: 017141) provides comprehensive coverage across copper, aluminum, rare earths, gold, lithium, tungsten, molybdenum, tin, and other industries. This full-category coverage enables better capture of the entire sector's beta trajectory. Additionally, the ETF is a margin-trading and short-selling target, serving as an efficient tool for one-click investment in the nonferrous metals sector. As of August 5, the Huabao Fund Nonferrous Metals ETF (159876) had a scale of 1.642 billion yuan and an average daily turnover of 104 million yuan this year, making it the largest and most liquid ETF among the three tracking the CSI Nonferrous Metals Index on the market. Source: Shanghai and Shenzhen stock exchanges, etc., as of August 6, 2026. *Referenced institutional views from Citic Securities' August 5 report "Citic Securities: $4,000 Likely the Bottom of This Range; Gold Prices Expected to Return to Upward Channel This Year" and China Galaxy Securities' July 12 report "Deep Dive into the Optical Device Industry: InP: Industrial Chain Positioning and Value Reassessment of the 'Invisible Cornerstone' of Optical Interconnection." ETF fund-related fees: Investors may be charged a commission of up to 0.5% by the subscription and redemption agency when applying for or redeeming fund shares. On-exchange trading fees are subject to actual charges by the securities company. ETFs do not charge sales service fees. Risk Warning: The Huabao Fund Nonferrous Metals ETF passively tracks the CSI Nonferrous Metals Index, which has a base date of December 31, 2013, and was launched on July 13, 2015. The constituent stocks of the index are adjusted according to its compilation rules. The historical performance of back-tested data does not predict future index performance. The constituent stocks mentioned in this article are for display purposes only and do not constitute investment advice of any form, nor do they represent the holdings or trading activity of any fund managed by the fund manager. The fund manager assesses the risk level of this fund as R3-Medium Risk, suitable for investors with a balanced (C3) or higher risk tolerance. The suitability matching opinion is subject to the sales institution's classification. Any information appearing in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, any form of expression, etc.) is for reference only. Investors must be responsible for their own investment decisions. Furthermore, any views, analyses, or forecasts in this article do not constitute investment advice to readers of any form, nor are they responsible for any direct or indirect losses arising from the use of the content. Fund investment carries risks. A fund's past performance is not indicative of its future results. The performance of other funds managed by the fund manager does not constitute a guarantee of the fund's performance. Fund investment should be approached with caution.
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