On August 5th, the non-ferrous metals sector led the broader market rally, with net inflows of over 11.4 billion yuan from main capital as of press time. The largest and most liquid* ETF tracking the same index, Non-ferrous Metals ETF (159876), saw its intraday price climb as much as 4.4% in early trading, currently up 4.08%, and has reclaimed its 250-day moving average. Since hitting a year-to-date low of 0.831 on July 20, the daily candlestick chart appears to be forming a pattern of upward consolidation.
With positive earnings surprises and low price levels, capital is actively positioning for a rebound from oversold conditions. As of press time, the Non-ferrous Metals ETF (159876) recorded a net subscription of 46.8 million units in real time, following net inflows of 127 million yuan over the previous five trading days.
Among the ETF's constituent stocks, indium-related concept stock Yunnan Lincang Xinyuan Germanium Industry Co.,Ltd. surged for a second consecutive daily limit-up, while Youyan New Materials hit the daily limit. Zhuye Group and Xiamen Tungsten rose over 7%, and Zhongjin Gold, Chifeng Gold, and Zhangyuan Tungsten gained more than 6%.
Indium phosphide, or InP, is a critical material. High-speed optical modules, silicon photonic modules, and CPO (co-packaged optics) systems require lasers to convert electrical signals into optical signals. High-performance EML, CW-DFB, and ultra-high-power lasers are largely built on the InP material platform. While GPUs handle computation and optical fibers transport data, InP lasers act as the "light-emitting engines" in optical networks. Without sufficient engine power, even with abundant switching chips, optical fibers, and servers, a complete AI cluster cannot be formed. Even if Lumentum expands output, related products are already booked through 2028.
Due to factors such as China's export licensing, concentrated global production capacity, and long expansion cycles, the average price of six-inch InP wafers once surged by approximately 250% compared to pre-restriction levels. Building a new InP material or device factory typically requires two to three years to establish stable supply. TrendForce notes that Nvidia, Google, and Meta have begun strategically locking in EML and CW-DFB capacity. Even with significant global capacity expansion expected by 2026, InP substrate, epitaxy, laser yield, and packaging remain major constraints for CPO mass production.
Notably, Yunnan Lincang Xinyuan Germanium Industry Co.,Ltd. is the most direct A-share listed company focused on InP substrates. Its subsidiary, Yunnan Xinyao, produces indium phosphide single crystals and chips, with products already supplied in bulk to downstream epitaxial manufacturers or device companies with epitaxial capabilities. The company launched a high-quality InP single-chip expansion project this year and is advancing toward larger-size chips. The significance lies not only in increasing quantity but also in improving crystal defect control, size, and batch consistency.
The Index Research and Investment Department of Hua Bao Fund points out that the non-ferrous metals sector offers strong fundamentals and low valuations, recommending attention to its right-side allocation value. Overall, the factors that had suppressed the sector's performance since March have largely been eliminated. Current commodity prices are stabilizing, supporting corporate profitability, and leading companies still have production growth contributions, resulting in high profit certainty. The combination of low valuations and high growth certainty makes now a favorable window for allocation in the non-ferrous metals sector.
Fundamentally, the non-ferrous metals sector is experiencing a wave of positive earnings reports. As of August 3, among the 60 constituent stocks of the index tracked by the Non-ferrous Metals ETF (159876), 39 listed companies have disclosed their 2026 interim earnings forecasts. All of these forecasted constituents reported expected profitability and growth, with Zijin Mining leading in projected net profit attributable to shareholders of up to 39.1 billion yuan, followed by Luoyang Molybdenum and Aluminum Corporation of China with projected net profits of up to 16.5 billion yuan and 12.2 billion yuan, respectively.
With positive earnings and bottoming consolidation, a rebound from oversold conditions is anticipated. Different non-ferrous metals have varying cycles, drivers, and levels of prosperity, making divergence inevitable. For those bullish on the sector, a more straightforward approach is to capture the broader sector's beta through comprehensive coverage. The Non-ferrous Metals ETF (159876) and its linked funds (Class A: 017140, Class C: 017141) track an index that comprehensively covers copper, aluminum, rare earths, gold, lithium, tungsten, molybdenum, tin, and other industries, enabling full-category participation in the sector's beta. Additionally, this ETF is a margin trading and short-selling target, serving as an efficient tool for one-click investment in the non-ferrous metals sector. As of the end of July, the Non-ferrous Metals ETF (159876) had a latest scale of 1.489 billion yuan, with an average daily trading volume of 104 million yuan this year, making it the largest and most liquid among the three ETFs tracking the CSI Non-ferrous Metals Index.
Source: Shanghai and Shenzhen stock exchanges, etc., as of August 5, 2026. Fee notes: When subscribing or redeeming fund shares, the subscription and redemption agency may charge a commission of up to 0.5%. On-exchange transaction fees are subject to actual charges by securities companies. The ETF does not charge a sales service fee. Risk warning: The Non-ferrous Metals ETF (159876) passively tracks the CSI Non-ferrous Metals Index, with a base date of December 31, 2013, and published on July 13, 2015. The index's constituent stocks are adjusted according to its compilation rules. Historical performance does not indicate future performance. The constituent stocks mentioned in this article are for display only, and individual stock descriptions do not constitute any form of investment advice, nor do they represent the holdings or trading intentions of any fund under the management company. The fund manager assesses the risk level of this fund as R3-medium risk, suitable for balanced (C3) and above investors. Please refer to the sales institution for suitability matching opinions. Any information appearing in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors must take full responsibility for their own investment decisions. Furthermore, any views, analyses, or forecasts in this article do not constitute investment advice to readers, and the author is not responsible for any direct or indirect losses arising from the use of this content. Fund investment involves risks. Past performance of a fund does not guarantee future results. Performance of other funds managed by the same manager does not constitute a guarantee of the fund's performance. Invest in funds with caution.
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