Despite frequent shifts in market themes this year, oil and gas stocks and related funds have maintained strong performance due to multiple factors. Against the backdrop of double-digit gains for many individual stocks, related ETFs have not only delivered excellent net value performance but have also seen their share sizes expand.
As longstanding players in the investment landscape, resource stocks like oil and gas have recently shown renewed vigor in the capital markets. Even after a strong rally, many public funds remain optimistic about demand-side support. Additionally, the dividend yield of the China Securities Oil and Gas Index currently stands at 3.64%. Some fund companies believe that in a low-interest-rate environment, such bond-like dividend assets are particularly valuable.
A wave of new oil and gas themed funds is being submitted for approval. Since February 2026, Brent crude oil has surged rapidly from $65 to $71, hitting a six-month high, which in turn fueled a sharp rise in related stock prices. Year-to-date, companies like Intercontinental Oil and Gas and Potential Energy have seen their shares climb over 57%, while Zhongman Oil has risen more than 40%. Others, including Blue Flame Holding, Shouhua Gas, and China National Offshore Oil Corporation (CNOOC), have also posted double-digit gains.
Consequently, several ETFs tracking oil and gas indices have achieved impressive returns this year. Products from China Universal Asset Management, Bosera Asset Management, and Yinhua Fund Management have gained over 18% year-to-date. Meanwhile, ETFs from Guotai Asset Management and Huatai-PineBridge Fund Management have seen increases exceeding 16%.
In terms of fund size, all related products have experienced growth this year, with a total of six products increasing by over 100 million units. Notably, the Guotai China Securities Oil and Gas Industry ETF expanded by more than 1.652 billion units, and the Penghua China Securities Oil and Gas ETF grew by over 1.191 billion units. Other funds, such as the Invesco Great Wall China Securities Oil and Gas ETF and the China Universal China Securities Oil and Gas Resources ETF, also saw increases exceeding 400 million units.
The enthusiasm in the secondary market has spread to product filings. According to Wind data, numerous fund companies are currently集中 submitting applications for oil and gas themed funds, with the total number reaching 11. Participants include Fullgoal Fund, GF Fund Management, Ping An Fund, and Yongying Fund, among others, with product types covering ETFs and feeder funds. Observers within the public fund industry view this trend as a strong signal of collective institutional optimism, alignment between policy and industry trends, synergy between capital and distribution channels, and strategic positioning of product lines. This typically indicates that the sector is entering a phase of consensus-driven institutional allocation.
The oil and gas sector still possesses room for further growth. As veteran components of the investment landscape, resource stocks like oil and gas have recently sprouted new shoots in the capital markets. The question remains: after such a strong rally, is there still upside potential?
Data shows that China's external dependence on oil reached 71.9% in 2024, indicating significant supply security pressures. The top three constituents of the China Securities Oil and Gas Index—PetroChina, Sinopec, and CNOOC—collectively account for over 90% of production, making them the undisputed backbone of supply security. Fullgoal Fund points out that oil and natural gas, as core global primary energy sources, still constitute over 60% of the energy consumption mix, underscoring their irreplaceability. Under the national energy security strategy, domestic production still has room for growth.
Furthermore, natural gas demand is growing rapidly, solidifying its role as a primary transition fuel. Fullgoal Fund notes that in the context of the global energy transition, natural gas, being a relatively clean fossil fuel, plays a crucial bridging role. Data indicates that China's natural gas consumption grew at a compound annual growth rate of 8.35% from 2015 to 2024. Peak consumption is projected to occur around 2040, reaching approximately 600-700 billion cubic meters.
China Asset Management also believes that, from a cyclical perspective, the market may be nearing a bottom. Oil prices underwent a significant correction in 2025, but a growing number of analysts suggest that the $55-$60 range might represent the lower bound of the current cycle. Simultaneously, the peak period for industry capital expenditure has passed, and the wave of supply expansion is receding. On the policy front, domestic efforts to curb excessive internal competition are showing results.
Moreover, current policies strictly control the addition of new refining capacity and promote the exit of outdated facilities. This signifies a shift in industry dynamics from past "disorderly expansion and price wars" to "survival of the fittest, where the strong get stronger." Industry leaders among the petrochemical index constituents, such as Wanhua Chemical and major private refining and chemical companies, are expected to further enhance their market share and pricing power.
Finally, regarding demand, China Asset Management highlights that if global interest rates enter a downward cycle, demand in traditional industries like home appliances and automobiles will likely find support. Meanwhile, emerging sectors such as new energy, new materials, and AI computing centers—representing "new quality productive forces"—are experiencing a surge in demand for high-end chemical materials. The petrochemical industry is transitioning from being purely cyclical to having both cyclical and growth characteristics. Frequent price movements in the petrochemical sector since the start of the year hint at this shift, suggesting that market consensus is forming. Therefore, 2026 could very well be a pivotal year for a cyclical turnaround in the petrochemical industry.
The sector also offers attractive dividend appeal. It is worth noting that all 11 passive funds currently in the application phase track the China Securities Oil and Gas Index exclusively. Some fund companies argue that even after months of gains, the index does not appear excessively "expensive" from a longer-term perspective.
According to statistics, as of February 13, the index's dynamic price-to-earnings ratio was 14.87 times, sitting at the 49.2 percentile over the past decade. Fullgoal Fund considers the current valuation to be within a reasonable range. More importantly, the index's dividend yield stands at 3.64%. In a low-interest-rate environment, such bond-like dividend assets are seen as particularly valuable.
"Top-level designs like the 'Energy Law' have clarified the industry's direction," Fullgoal Fund stated. "Reforms such as pipeline network opening and market integration have improved efficiency, while normalized regulation has reduced risks of extreme volatility. With the advancement of performance evaluations focused on market value management for central state-owned enterprises, expectations for increased dividend payout ratios for oil and gas companies, exemplified by the 'big three' national oil companies, are clear. The high-dividend characteristic is poised to resonate with the rising price cycle of resource commodities."
Huaxin Securities believes that amid expectations of a retreat in international oil prices, the "big three" national oil companies, which possess the highest asset quality and dividend yields, stand to benefit significantly. Sinopec, with its substantial chemical output, gains deeply from lower raw material costs, while its stable cash flow and strong dividend capability form core advantages. Additionally, major private refining and chemical companies, known for their high chemical yields and superior production efficiency, are also expected to benefit during this phase of declining oil prices.
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