The market consolidated today (July 2nd) with major A-share indices closing in negative territory. However, the nonferrous metals sector bucked the trend, showing notable activity. Huabao Nonferrous Metals ETF (159876), the largest ETF tracking its underlying index*, saw its intraday price surge as much as 2.8%, closing up 0.21%. Data from the Shenzhen Stock Exchange shows the ETF recorded net fund inflows of 112 million units throughout the trading day.
Regarding its constituent stocks, leading gold companies were particularly active. Among the top 10 gainers, gold leaders occupied five spots. Chifeng Gold hit the daily limit-up, while Shandong Gold Mining International and Zhangyuan Tungsten touched the limit-up during the session, still closing with gains exceeding 7%. Yongxing Special Materials rose over 6%, and Zijin Mining Group climbed more than 4%.
On the macroeconomic front, Federal Reserve Governor Waller delivered key remarks at a European Central Bank forum on central banking this past Wednesday. He noted that US inflation expectations and upside risks have receded over the past four weeks. Coupled with previously released US employment data that fell short of expectations, these signals have collectively weakened market expectations for a Fed rate hike within the year. Following these relatively dovish comments, US Treasury yields and the US dollar index weakened simultaneously, providing a significant boost to the non-yielding asset gold. Overnight, spot gold surged towards the $4100 per ounce level. Industry analysis points out that the market had already largely priced in expectations for Fed rate hikes. The cooling inflation and softening employment data have substantially reduced the necessity for a hike this year, suggesting the pressure from high interest rates on precious metals will gradually ease. From a medium to long-term perspective, global geopolitical risks, continued gold purchases by central banks worldwide, and the trend of de-dollarization continue to provide solid support for gold prices, laying a foundation for a sustained upward shift in the price center. Funds are concurrently increasing allocations to the precious metals sector.
At the industry level, supply-side shocks are pushing metal prices higher. On July 1st, Xiamen Tungsten disclosed in an announcement that its controlling subsidiary, Luoyang Yulu, had its supply of tailings suspended by its other shareholder, China Molybdenum. Consequently, Luoyang Yulu is unable to produce. As of now, Luoyang Yulu has essentially halted production. Separately, two major Japanese suppliers, Kanto Denka Kogyo and Central Glass, permanently shut down their tungsten hexafluoride production lines starting July 1st, creating an annual global supply gap of approximately 2,000 tonnes. Regarding this supply suspension, a representative from China Molybdenum stated it was a measure taken to comply with national regulatory requirements for tungsten mining and to ensure compliant production operations.
Huatai Securities noted that the nonferrous metals sector's current relative valuation is at a historically extreme low, presenting a high risk-reward profile. Although subject to short-term pressure from rate hike expectations, the sector is expected to be driven by fundamentals in the medium term*. CITIC Securities believes that with significant changes in the external environment, nonferrous metals, as one of the sectors most negatively impacted previously, are poised for a rebound. Coupled with expectations for mid-year earnings reports, the sustainability and intensity of this rebound may exceed previous cycles*.
Nonferrous Metals Momentum Arrives, "Supercycle" Unstoppable
Huabao Nonferrous Metals ETF (159876) and its feeder funds (Class A: 017140, Class C: 017141) track an index that comprehensively covers sectors including copper, aluminum, gold, rare earths, lithium, tungsten, molybdenum, and tin. This broad coverage allows for better capture of the sector's overall beta performance. Additionally, this ETF is eligible for margin trading and securities lending, serving as an efficient tool for gaining exposure to the nonferrous metals sector. As of the end of June, Huabao Nonferrous Metals ETF (159876) had a latest size of 1.345 billion yuan, making it the largest ETF among the three products in the market tracking the same underlying index.
*Institutional views reference: 1) Huatai Securities report "Huatai Securities: Bullish on the High Risk-Reward Profile of the Nonferrous Metals Sector" released June 30. 2) CITIC Securities report "Nonferrous Metals Industry Mid-2026 Strategy: Easing External Constraints, Opening the Door for Cyclical Recovery" released June 25.
ETF Fee Information: When subscribing for or redeeming fund units, subscription/redemption agents may charge a commission not exceeding 0.5%. On-market trading fees are subject to the actual charges by securities firms. The ETF does not charge a sales service fee.
Feeder Fund Fee Information: For the Class A shares of Huabao CSI Nonferrous Metals ETF Feeder Fund, the subscription fee is 1,000 RMB per transaction for subscription amounts of 2 million RMB or more, 0.6% for amounts between 1 million RMB (inclusive) and 2 million RMB, and 1% for amounts below 1 million RMB. The redemption fee is 1.5% for holding periods under 7 days and 0% for holding periods of 7 days or more. No sales service fee is charged. For the Class C shares, no subscription fee is charged. The redemption fee is 1.5% for holding periods under 7 days and 0% for holding periods of 7 days or more. A sales service fee of 0.3% applies.
Risk Disclosure: Huabao Nonferrous Metals ETF passively tracks the CSI Nonferrous Metals Index. The index base date is December 31, 2013, and it was launched on July 13, 2015. The composition of the index's constituent stocks is adjusted according to its compilation rules. Its back-tested historical performance does not indicate future index performance. The constituent stocks mentioned herein are for illustrative purposes only. Descriptions of individual stocks are not intended as any form of investment advice and do not represent the holdings or trading动向 of any fund managed by the fund manager. The fund manager assesses this fund's risk等级 as R3-Medium Risk, suitable for investors with a Balanced (C3) or higher risk profile. Suitability matching opinions should be based on the selling 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, analysis, or forecasts herein do not constitute investment advice of any kind to readers, and no liability is accepted for any direct or indirect losses arising from the use of this content. Fund investment involves risks. The past performance of a fund does not represent its future performance. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Invest in funds with caution.
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