China's A-share market staged a dramatic reversal on Monday, July 14th, with the three major indices collectively strengthening in the afternoon session. At the close, the Shanghai Composite Index rose 1.36% to 3,967.13 points, the Shenzhen Component Index gained 2.77%, and the ChiNext Index surged 3.43%. The combined trading volume for the Shanghai, Shenzhen, and Beijing exchanges reached 2.72 trillion yuan.
In terms of sector performance, the nonferrous metals sector suddenly surged in the afternoon. The in-market price of the largest ETF tracking the relevant index, the Hwabao Nonferrous Metals ETF (159876), soared by 4.91%. Computing hardware led a deep-V reversal, with optical modules and CPO (Co-Packaged Optics) making strong advances. ETFs representing the broader technology sector also posted significant gains. The Hwabao Technology ETF (515000), which tracks the overall performance of tech leaders, the Hwabao ChiNext Artificial Intelligence ETF (159363) heavily weighted in optical module leaders, and the Hwabao Electronics ETF (515260) covering semiconductors and PCBs, all saw their in-market prices close up over 3%.
Market Analysis and Key Drivers
The following analysis focuses on the trading and fundamental conditions of the nonferrous metals, ChiNext AI, and pharmaceutical sectors.
Nonferrous Metals Sector Surges on Strong Earnings
The nonferrous metals sector experienced a sudden afternoon surge. The in-market price of the largest ETF tracking the relevant index, the Hwabao Nonferrous Metals ETF (159876), jumped 4.91%, closing at the day's high. The combination of low valuations and strong earnings attracted accelerated capital inflows. Data shows this ETF attracted 220 million yuan in net inflows over the past 10 trading days.
Among constituent stocks, aluminum leaders Zhongfu Industrial and Tianshan Aluminum hit the daily limit-up, lead-zinc leader Chihong Zinc & Germanium also reached limit-up, and rare earth leader China Rare Earth surged over 9%. Among heavyweight stocks, Aluminum Corporation of China Limited rose over 9%, China Molybdenum gained more than 8%, and Zijin Mining advanced over 6%.
Key news driving the active performance in rare earths and aluminum includes a 178.82% year-on-year surge in China's rare earth exports in June, as per customs data. Furthermore, rare earths were included in the strategic mineral catalog in June, strengthening expectations for critical resource management controls. In the aluminum sector, Aluminum Corporation of China Limited announced strong preliminary H1 2026 earnings, expecting net profit attributable to shareholders to reach 11.2-12.2 billion yuan, a significant 58%-73% year-on-year increase, marking its best historical first-half performance.
Fundamentally, among the 60 constituents of the index tracked by the Hwabao Nonferrous Metals ETF (159876), 27 companies had disclosed H1 2026 earnings forecasts as of July 14th. All 27 are expected to be profitable and show growth. Zijin Mining leads with a projected maximum net profit of 39.1 billion yuan, followed by China Molybdenum and Aluminum Corporation of China Limited with 16.5 billion and 12.2 billion yuan, respectively.
Analysts point out that while the nonferrous metals sector's current prosperity is high, its relative valuation is at a historical low, suggesting potential for valuation recovery. As one of the sectors hardest hit previously, nonferrous metals are expected to stage a rebound, potentially stronger than past cycles, especially with the support of mid-year earnings expectations.
Technology Sector's Deep-V Reversal
After breaking below its annual support line, the A-share market mounted a counterattack, led by computing hardware. Optical modules and CPO spearheaded the advance, with stocks like Liante Technology soaring 12.85% and Eoptolink Technology Inc. surging 11%. The PCB sector saw a wave of limit-ups, with stocks like Wus Printed Circuit and Shengyi Technology hitting the daily ceiling. The semiconductor chain was also active.
Among popular ETFs, the Hwabao Technology ETF (515000), representing the overall tech leader landscape, rose sharply in the afternoon, closing up 3.75% with significant net inflows of 7.6 billion yuan over 10 days. The Hwabao ChiNext Artificial Intelligence ETF (159363), heavily weighted in optical module leaders, gained 3.26% and reclaimed its 60-day moving average. Following a large inflow of 466 million units the previous day, it saw another substantial net subscription of 138 million units on Monday, indicating accelerating capital inflows.
Several factors likely catalyzed today's tech rally: technical signals suggesting the annual line is a strong support level, the mitigation of risk from South Korea's leveraged ETF crisis easing foreign capital concerns, and fundamental catalysts including strong H1 high-tech product exports and positive corporate news within the semiconductor chain.
In specific sub-sectors, the PCB rally was driven by earnings. Core PCB companies like Wus Printed Circuit and Shengyi Technology released strong H1 2026 earnings forecasts. Analysis suggests the AI uptrend remains intact, with new product cycles underway. For optical modules, analysts believe the current period presents an important window for investing in optical communication leaders, citing continued growth in capital expenditure by major North American cloud service providers, healthy pricing dynamics, and strong short-to-medium-term earnings certainty within the tech sector.
Pharmaceutical Sector Rallies on Positive News
Oversold pharmaceutical assets regained momentum on Monday. The largest medical ETF by market size, the Hwabao Medical ETF (512170), rose 2.57% on volume of 8.2 billion yuan, following over 200 million yuan in net subscriptions the previous day. Among constituents, Andon Health Co., Ltd. hit limit-up, and CXO leaders rallied strongly, with WuXi AppTec surging 6%.
The pharmaceutical sector strengthened in the afternoon, led again by innovative drugs. Dizal Pharmaceutical soared 20% to hit limit-up after announcing a licensing agreement with AstraZeneca for its drug Suvozert, which includes a $600 million upfront payment, setting a new record for upfront payments in Chinese small-molecule targeted drug out-licensing deals.
Recent heavyweight policies have significantly boosted sector sentiment. These include the State Council's "15th Five-Year Plan" for national health, which explicitly supports the entire chain of innovative drug and medical device development, and the release of the new National Essential Medicines Directory (2026 edition), which expanded the total number of drugs and included 16 innovative drugs for the first time.
Fund managers noted that after years of adjustment, the medical sector's valuation is at a historical bottom, the policy environment has shifted from suppression to support, and fundamentals in some sub-sectors are showing upward trends, warranting close attention.
Investment Products in Focus
The Hwabao Nonferrous Metals ETF (159876) and its feeder funds provide broad exposure to copper, aluminum, gold, rare earths, lithium, and other metals, offering a tool to capture the sector's beta. With a size of 1.412 billion yuan as of July 13th, it is the largest ETF tracking its benchmark index.
For technology exposure, the Hwabao Technology ETF (515000) selects 50 leading A-share tech companies, while the Hwabao ChiNext Artificial Intelligence ETF (159363) focuses on AI computing power, with about 40% weight in leaders like Innolight, Eoptolink Technology Inc., and TFC Optical Communication. It boasts a size exceeding 7.4 billion yuan and high liquidity.
For the pharmaceutical sector, the Hwabao Medical ETF (512170), the largest medical/healthcare ETF by size (over 25.8 billion yuan), focuses on medical services (including CXO) and medical devices. The Hwabao Pharmaceutical ETF (562050), the only ETF tracking a pharmaceutical index, offers a unique "75% innovative drugs + 25% traditional Chinese medicine" allocation.
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