The metals and mining sector led the market gains today (July 22). The largest and most liquid ETF tracking the sector, the Huabao Nonferrous Metals ETF (159876), saw its on-exchange price gap up sharply by 4.54%, reclaiming its 10-day moving average intraday and aiming for a second consecutive positive close.
Among its constituent stocks, Shandong Gold International, Western Mining, Shengtun Mining Group, and Xingye Silver & Tin all hit the daily limit-up of 10%. Chifeng Gold surged over 9%, while Jiangxi Copper and China Molybdenum rose more than 8%. Zhongjin Gold and Zijin Mining Group gained over 7%, with Shandong Gold, Western Gold, and others following suit with significant increases.
Huabao Fund's Index Research and Investment Department released a fresh analysis stating that tight supply and demand in the nonferrous metals sector support robust prices. Precious metals are rebounding on shifting rate cut expectations and rising ETF holdings, while minor metal prices fluctuate with tech sector beta. Overall, equity valuations in the nonferrous metals sector are currently low. Sustained strong commodity prices can support improving corporate earnings, making the sector's valuation attractive and highlighting its potential for right-side allocation. The details are as follows:
Reassessing the Sector's Pullback
A review of the sector's correction in the first half of the year points to three key factors. First, geopolitical events in the Middle East in March pushed oil prices higher, sparking market fears of resurgent inflation leading to rate hikes or a recession. These fears have since been disproven, with oil prices now facing both support and resistance, making a break above previous highs difficult under extreme conditions. Second, a significant upward revision to the US core inflation figure for May fueled Federal Reserve rate hike expectations, but June's core CPI has shown a sequential decline, causing rate cut expectations to shift back. Third, the tech sector's strong rally initially drew capital away from metals. However, nonferrous metals are at the very upstream end of the tech supply chain, and data center construction will continue to drive demand for these materials. Taken together, the factors suppressing the sector since March have largely been eliminated.
Breakdown by Segment
Looking at specific segments, for industrial metals, commodity prices remain firm, and corporate output growth contributes to sustained growth, highlighting the segment's allocation value. Leading companies like Zijin Mining Group and China Molybdenum plan to increase copper production to 1.55 million tonnes and 900,000 tonnes respectively by 2028, up by 460,000 tonnes and 160,000 tonnes from 2025 levels, representing growth rates of 42% and 20%. Even without commodity price increases, these companies maintain solid growth prospects through production expansion. Fundamentally, metals like copper, aluminum, and tin continue to see inventory drawdowns, confirming expectations of tight supply and demand. This tight balance is expected to persist in the medium to long term, supporting strong nonferrous metals prices. Based on price assumptions of 100,000 yuan per tonne for copper and 22,000 yuan per tonne for aluminum, mainstream stocks in the copper and aluminum segments are mostly valued in the 5-10x P/E range, which is relatively low.
For precious metals, gold prices have found support around $4,000 after multiple tests. US June non-farm payroll and inflation data both came in well below market expectations, gradually easing market panic over Fed rate hikes. Gold prices are also becoming less sensitive to US-Iran tensions. Using a conservative full-year Shanghai gold average price of 900 yuan per gram, mainstream gold stocks are valued at only 10-15x 2026 earnings, offering compelling valuation appeal.
In summary, both industrial and precious metals experienced oversold conditions due to the dual pressures of high oil prices from US-Iran tensions and the tech sector's pullback. Current stable commodity prices support corporate earnings, and leading companies still have production growth to contribute, giving the sector relatively high earnings certainty. The combination of low valuations and high growth certainty presents a quality allocation window for the nonferrous metals sector.
An Efficient Tool for Sector Exposure
Different nonferrous metals have varying cycles, drivers, and performance timings, making divergence inevitable. For investors bullish on the sector, a straightforward approach to capturing the broader beta is through comprehensive coverage. The Huabao Nonferrous Metals ETF (159876) and its feeder funds (Class A: 017140, Class C: 017141) track an index that comprehensively covers industries including copper, aluminum, rare earths, gold, lithium, tungsten, molybdenum, and tin. This full-category coverage allows for better capture of the sector's overall beta. Additionally, this ETF is a margin trading security, making it an efficient tool for a one-click allocation to the nonferrous metals sector.
As of June 30, 2026, the Huabao Nonferrous Metals ETF (159876) had a latest size of 1.345 billion yuan, with a six-month average daily turnover of 107 million yuan. Among all three ETFs tracking the CSI Nonferrous Metals Index in the market, it is the largest and most liquid.
Source: Shanghai & Shenzhen Stock Exchanges, etc., data as of July 22, 2026.
Note: The Huabao Nonferrous Metals ETF (159876) was previously known on-exchange as the Nonferrous Metals Leaders ETF.
ETF Fee Information: When subscribing for or redeeming fund shares, subscription/redemption agents may charge a commission of up to 0.5%. On-exchange trading fees are subject to the actual charges by securities firms. The ETF does not charge a sales service fee.
Risk Disclosure: The Huabao Nonferrous Metals ETF passively tracks the CSI Nonferrous Metals Index. The index base date is December 31, 2013, and its release date is July 13, 2015. The index constituents are adjusted according to its rules. Its back-tested historical performance does not indicate future index performance. The index constituents mentioned herein are for illustrative purposes only. Descriptions of individual stocks do not constitute investment advice in any form nor do they represent the holdings or trading动向 of any fund managed by the manager. The fund manager assesses this fund's risk等级 as R3-Medium Risk, suitable for Balanced (C3) and above investors. Suitability matching opinions are subject to sales institutions. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, any form of表述, etc.) is for reference only. Investors must be responsible for any independent investment decisions. Furthermore, any views, analysis, or forecasts herein do not constitute investment advice of any kind to the reader, nor shall they be liable for any direct or indirect losses arising from the use of this content. Fund investment involves risk. 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. Fund investment must be approached with caution.
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