The market consolidated today (May 29). The Huabao Nonferrous Metals ETF (159876), which aggregates leading companies in the nonferrous metals sector, saw its intraday gains reach as high as 1.55% in early trading before pulling back with the broader market. It is currently fluctuating near the flatline, with the latest price down 0.29%. Real-time turnover has exceeded 77 million yuan, indicating active trading.
In terms of constituent stocks, leaders in the aluminum sector notably led the gains. Shanghai Huafon Aluminium Corporation hit the daily limit-up, while Nanshan Aluminium rose over 3%. Shenhuo Group and Aluminum Corporation of China both gained more than 2%. Additionally, tungsten leader Xiamen Tungsten surged nearly 6%, and copper leader Tongling Nonferrous Metals rose over 4%. On the other hand, Jinduicheng Molybdenum briefly hit the daily limit-down, while Grirem Advanced Materials and China Rare Earth Resources fell over 5%, ranking among the top decliners and dragging on the index performance.
The CSI Nonferrous Metals Index has retreated more than 20% from its intra-year high, significantly eroding the sector's year-to-date gains, which now stand at only about 3%. This collective weakness in the nonferrous metals sector is primarily attributed to a confluence of multiple macro headwinds. The ongoing geopolitical tensions in the Middle East between Iran and the US continue to disrupt global markets, pushing up international oil prices and thereby exacerbating US inflationary pressures. Coupled with the new Federal Reserve Chair taking office, market expectations for interest rate cuts have faded while expectations for rate hikes and balance sheet reduction have intensified, directly suppressing prices of commodities and precious metals.
Despite the sharp short-term volatility in the sector, many institutions believe the underlying fundamentals of the nonferrous metals industry remain solid, and it may be prudent to await a value recovery. Gold has long-term allocation support, while supply for industrial metals like copper and aluminum faces rigid constraints. As expectations for macro liquidity gradually improve, the sector is expected to see a return to value.
Taking aluminum as an example, analysts point out that at the industry level, the US-Iran conflict has already led to substantial production cuts in overseas supply. To date, confirmed shutdowns of electrolytic aluminum capacity in the Middle East have reached 2.22 million tons, accounting for about 3% of global supply. With the Middle East conflict still ongoing, there is a potential risk of further capacity shutdowns. Moreover, due to the specific nature of electrolytic aluminum production, once capacity is halted, it cannot be quickly restarted in the short term. The restart cycle typically takes 6-12 months and requires stable power supply and sufficient raw material availability. It is estimated that restarting this capacity within 2026 will be difficult. Combined with the fact that China's operating electrolytic aluminum capacity is already nearing its "ceiling," the overall industry supply structure is tightening for the year, supporting aluminum prices.
At the macro level, industry insiders suggest that the US's tolerance for high interest rates may be limited. Therefore, substantial large-scale balance sheet reduction and rate hikes by the Fed might not be the preferred option in the current macro context. Attention should be paid to changes in market expectations regarding US monetary policy and the potential for a subsequent recovery in expectations driven by such changes.
On the performance front, for the first quarter of 2026, among the 60 constituent stocks of the Huabao Nonferrous Metals ETF (159876), 59 companies reported profits. Eighty percent of the companies achieved double-digit year-on-year growth in net profit attributable to the parent company, with 22 companies reporting triple-digit year-on-year surges! Western Region Gold and Tianqi Lithium Industries saw explosive growth of 21 times and 17 times year-on-year, respectively.
Looking ahead, industry professionals indicate that cyclical resource sectors like nonferrous metals, while facing short-term market fluctuations, are expected to deliver promising long-term performance due to industrial structure optimization and sustained demand growth. Furthermore, based on earnings trend model analysis, the current valuation of the nonferrous metals sector is reasonable, and it may see a rebound opportunity. It is recommended to focus on its potential performance within the industrial chain and seize the investment window presented by the oversold conditions.
The Huabao Nonferrous Metals ETF (159876) and its feeder funds (Class A: 017140, Class C: 017141) track a benchmark index that comprehensively covers sectors including copper, aluminum, gold, rare earths, and lithium. This broad coverage allows for better capture of the sector's beta trends. Simultaneously, this ETF is a margin trading and securities lending target, serving as an efficient tool for a one-stop allocation to the nonferrous metals sector.
As of the end of April, the Huabao Nonferrous Metals ETF (159876) had a latest size of 1.865 billion yuan, making it the largest ETF among the three products tracking the same benchmark index in the entire market.
Note: The previous on-market abbreviation for the Huabao Nonferrous Metals ETF (159876) was Nonferrous Metals Leaders ETF.
Risk Disclosure: The Huabao Nonferrous Metals ETF passively tracks the CSI Nonferrous Metals Index. The base date for this index is December 31, 2013, and it was released on July 13, 2015. The composition of the index's constituent stocks is adjusted according to its compilation rules. The index's back-tested historical performance does not indicate its future performance. The constituent stocks mentioned in this article are for illustrative purposes only. Descriptions of individual stocks do not constitute investment advice in any form, nor do they represent the holdings information or trading动向 of any fund under the management company. The fund manager assesses the risk rating of this fund as R3-Medium Risk, suitable for Balanced (C3) and above investors. The suitability matching opinion should be based on the sales institution. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors are responsible for any independent investment decisions. Furthermore, any views, analyses, or forecasts in this article do not constitute investment advice of any kind to the reader, nor is there any liability for direct or indirect losses arising from the use of this content. Fund investment involves risks. The past performance of a fund does not indicate its future performance. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Caution is advised in fund investment.
A MACD golden cross signal has formed, and these stocks are performing well.
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