On the second-to-last trading day of 2025 (December 30), A-shares rallied in the afternoon, with the Shanghai Composite Index securing a 10-day consecutive gain, setting a new record for the longest winning streak of the year! The Shenzhen Component Index and the ChiNext Index both closed higher, while the market turnover exceeded 2 trillion yuan for the third consecutive day.
On the market, the chemical and nonferrous metals sectors opened lower but climbed higher, soaring together. The 3.7 billion-yuan Chemical ETF (516020) surged over 2.5% intraday, with its price hitting a new three-year high, supported by particularly strong fund inflows, attracting 260 million yuan in a single day during yesterday's pullback! The popular Nonferrous Metals ETF Huabao (159876), which hit a record high just yesterday, rose another 1.75% today, demonstrating its strong momentum.
Technology stocks remained active, with the "AI Twin Stars" rising together: the ChiNext AI ETF Huabao (159363), with over 56% exposure to optical modules, reached a new closing high, while the STAR Market AI ETF Huabao (589520), focused on the domestic AI industry chain, marked its fifth consecutive daily gain.
The hot commercial aerospace sector initially surged but then pulled back, with individual stocks experiencing heavy volume and turning negative. Aerospace Development and China Satellite saw record-breaking trading volumes of 21.618 billion yuan and 19.871 billion yuan respectively, taking the top two spots for A-share turnover. Related popular ETFs – the Military ETF Huabao (512810) and the General Aviation ETF Huabao (159231) – both turned negative, halting their four-day winning streaks.
The Hong Kong market saw a broad recovery, with the Hang Seng Index closing up 0.86%. Hard tech stocks led the charge, as the Hang Seng Tech Index rebounded strongly by 1.74%. The market's first ETF focusing on the "Hong Kong chip" industry chain, the Hong Kong Information Technology ETF (159131), surged 2% to reclaim its 20-day moving average! The Hong Kong Internet ETF (513770), heavily weighted in internet giants, closed higher on heavy volume, while the newly listed Hong Kong Stock Connect Auto ETF Huabao (520780) successfully extended its winning streak.
The Hong Kong Stock Connect innovative drug sector lagged behind again in the short term, with the Hong Kong Stock Connect Innovative Drug ETF (520880) hitting a new low since July 10. However, it traded at a significant premium throughout the day, reflecting bargain-hunting activity. Analysis suggests the continued adjustment in innovative drugs may still be driven by a fading of previously optimistic BD expectations, primarily due to fund flows. Nonetheless, the industry's fundamentals remain sound, with recent clinical data for domestic new drugs validating expectations and a mature trend, while quality BD projects are still available.
As the 2025 stock market concludes tomorrow, attention turns to whether the Shanghai Composite's annual K-line can close above 4000 points. Historically, the Shanghai Composite only closed above 4000 points in 2007. Synthesizing views from multiple institutions, the market is gradually accumulating upward momentum with frequent hotspots, suggesting the "year-end transition" rally may continue. For Hong Kong stocks, 2026 could see earnings and liquidity jointly driving market performance, with sectors like Hong Kong chips and internet currently offering attractive investment value.
[ETF Knowledge Hot Review] Below is a focused discussion on the trading and fundamental conditions of several sectors, including Hong Kong information technology, A-share chemicals, and nonferrous metals. SMIC surged over 4%, leading a strong outperformance by its index! The first Hong Kong IT ETF (159131), heavily weighted in the "HK chip chain," surged 2% on heavy volume.
Hong Kong hard tech stocks, represented by the semiconductor chip industry chain, staged a strong rebound. The Hang Seng Stock Connect Information Technology Index rose over 2%, significantly outperforming other Hong Kong tech indices like the Hang Seng Tech Index, Hang Seng Stock Connect Technology Index, and Hang Seng Stock Connect Internet Index. Its year-to-date gain exceeds 39%, also leading the pack substantially.
The market's first ETF focusing on the "Hong Kong chip" industry chain, the Hong Kong Information Technology ETF (159131), traded in a narrow range in the morning but gained strength in the afternoon, closing up 2% on heavy volume with a daily turnover of 77.27 million yuan, reclaiming both its 5-day and 20-day moving averages.
Among its constituents, Innoscience surged over 15%, Mafengwo rose over 11%, Ubtech gained over 8%, 4th Paradigm advanced over 7%, while SMIC, iFlytek Medical Technology, and Fengtou Technology each increased over 4%.
On the news front, SMIC plans to acquire a 49% stake in SMIC Northern, which would make it a wholly-owned subsidiary post-transaction. Concurrently, SMIC Southern, a subsidiary, will receive a total cash injection of $7.778 billion. Industry insiders believe this capital operation by SMIC could present development opportunities for domestic chips, particularly in semiconductor equipment and domestic AI infrastructure. It signals potential future capital expenditure improvements for relevant processes and demonstrates the company's effort to strengthen control over core manufacturing and enhance domestic chip self-sufficiency.
An AIJian Securities research report notes that data shows China's semiconductor market size reached $176.9 billion in 2024 (up 15.9% YoY), with an expected $206.7 billion in 2025. Driven by both national policy and the international situation, the domestic semiconductor industry chain is making continuous breakthroughs, moving from downstream manufacturing and packaging/testing to upstream core equipment, materials, and software. The long-term development of the domestic semiconductor industry chain is viewed positively, especially regarding breakthroughs in core "chokepoint" technologies. Investment opportunities may lie in areas like third-generation semiconductor materials, computing power chips, RF communication chips, and high-bandwidth memory within the domestic semiconductor chain.
Valuation-wise, "Hong Kong chips" offer relatively prominent investment value. As of December 30, 2025, the benchmark index for the Hong Kong Information Technology ETF (159131) has a latest P/E ratio of 33.25x, sitting at the 37.58 percentile over the past three years. This suggests over 57% potential upside compared to the February high this year, and its valuation appeal significantly outperforms major tech indices like the ChiNext Index (P/E 41.04x, 3-year percentile 90.26%) and the Nasdaq 100 (P/E 36.23x, 3-year percentile 74.52%).
Targeting the Hong Kong chip super cycle! A T+0 eligible ETF for the HK chip industry chain is here – the market's first Hong Kong Information Technology ETF (159131) focused on the "HK chip" chain. Its benchmark index comprises "70% hardware + 30% software," heavily weighting Hong Kong "semiconductors + electronics + computer software." It covers 42 Hong Kong hard tech companies, with SMIC having a 15.19% weighting, Xiaomi Group-W at 14.21%, and Huahong Semiconductor at 5.84%. It excludes large-cap internet firms like Alibaba, Tencent, and Meituan, offering higher focus and easier capture of Hong Kong's AI hard tech trends. (Data as of December 29, 2025) The chemical sector regained its offensive today! The Chemical ETF (516020), reflecting the overall sector trend, opened lower but oscillated higher intraday, with its price reaching a maximum gain of 2.56%. It closed up 1.98%, setting a new closing high since September 2022.
Among constituents, stocks in petrochemicals, polyester, phosphorous chemicals, and lithium battery sectors led the gains. At the close, Hengyi Petrochemical hit the limit-up, Xin Feng Ming and Rongsheng Petrochemical both rose over 7%, Hengli Petrochemical gained over 6%, while Kingfa Science & Technology, Yuntianhua, and Tinci Materials also advanced notably.
Notably, benefiting from policy support and cyclical reversal, the chemical sector has significantly outperformed the broader market this year. Data shows that as of today's close, the Chemical ETF's (516020) benchmark Sub-Sector Chemical Index has surged 41.4% year-to-date, markedly outperforming major A-share indices like the Shanghai Composite (18.3%) and the CSI 300 (18.21%) over the same period.
Regarding hot sub-sector news, in recent years, the large-scale application of fast-charging lithium iron phosphate (LFP) in power and high demand in energy storage have further boosted LFP cathode material shipments. According to Zeyan Consulting data, China's LFP production totaled 3.48 million tons from January to November 2025, up 57.9% YoY. For November 2025 alone, LFP production was 417,000 tons, up 52.8% YoY and 4.2% MoM, hitting a record high.
A CITIC Securities report indicates that the LFP industry's profitability may be approaching a cyclical inflection point. On the demand side, further penetration of LFP in power and robust energy storage demand drive rapid growth. They estimate global LFP cathode material shipments could reach 5.25 million tons in 2026, up 36% YoY. On the supply side, growth is expected to be limited in 2026, with overall utilization rates likely to improve further, particularly for high-end products which remain relatively tight. Current LFP profitability is at a cyclical bottom, with potential for recovery as supply-demand dynamics improve. The trends towards product premiumization and overseas expansion may bring超额 profits to leading companies.
Valuation-wise, data shows that as of yesterday's close (December 29), the Chemical ETF's (516020) benchmark Sub-Sector Chemical Index had a P/B ratio of 2.57x, positioned at a relatively reasonable 49.51 percentile over the past decade, indicating medium-to-long term配置 value.
Looking ahead, Dongxing Securities states that from the supply side, fixed asset investment growth in China's chemical industry continues to slow, with "anti-involution" policies guiding industry discipline. Coupled with increased exit of outdated overseas chemical capacity, industry profitability is expected to improve. On the demand side, domestic manufacturing demand is experiencing a weak recovery, with emerging sectors potentially providing增量. Supply-demand dynamics for some domestic chemical sub-sectors show improving trends, with看好 outlook for titanium dioxide, certain pesticides, chemical fibers, and refrigerants sub-sectors to gradually improve.
How to capture the chemical sector's rebound opportunities? Using the Chemical ETF (516020) might offer higher efficiency. Public information shows the Chemical ETF (516020) tracks the CSI Sub-Sector Chemical Industry Theme Index, comprehensively covering various chemical sub-sectors. Nearly half its allocation concentrates on large-cap leaders like Wanhua Chemical and Salt Lake Potash, capturing强者恒强 opportunities; the other half allocates to leaders in sub-sectors like phosphate fertilizers/phosphorous chemicals, fluorochemicals, and nitrogen fertilizers, providing broad exposure to the chemical sector. Off-exchange investors can also access the sector via the Chemical ETF Link Fund (Class A: 012537 / Class C: 012538). Soaring from the ground up! The Nonferrous Metals ETF Huabao (159876), encompassing leading nonferrous metals companies, opened significantly lower, with its price dropping over 2%, but quickly reversed course to climb, reaching an intraday high of 2.27% before closing up 1.75%, with a daily amplitude of 4.95%.
Notably, after刷新 its listing high yesterday, the Nonferrous Metals ETF Huabao (159876)'s price rose another 1.75% today, demonstrating strong momentum. Reflecting optimism for the sector's outlook, the ETF saw net inflows of 28.8 million shares for the day!
Among constituents, Yunnan Aluminium and Tianshan Aluminum both hit record highs, Hailiang Co. rose over 5%, Aluminum Corporation of China (Chalco) and Huayou Cobalt gained over 4%, while China Molybdenum and Zijin Mining followed suit.
On the news front, gold, silver, and other precious metals futures plummeted last night, potentially due to two triggers: ① CME announced comprehensive increases in performance margins for various metal futures including gold, silver, and lithium; ② Due to the surge in gold and silver, their weightings in indices exceeded stipulated limits, requiring institutional funds tracking indices like the Bloomberg Commodity Index (BCOM) to perform portfolio rebalancing.
Huatai Securities points out that passive selling during the 2026 BCOM rebalancing affects short-term trading rhythm and price volatility more than it alters gold and silver's long-term role in macro hedging, asset allocation, and commodity portfolios. Considering expected loose liquidity, rising inflation, and a weak USD in 2026 are favorable for further gold price increases. Indeed, international COMEX gold has already resumed its upward trend today.
Focusing on A-shares, the electrolytic aluminum concept strengthened. Yunnan Aluminium and Tianshan Aluminum both hit new highs. Reports indicate the National Development and Reform Commission's Industrial Development Department published an article advocating for the optimization and upgrading of traditional industries, encouraging large-scale alumina and copper smelting骨干 enterprises to pursue mergers, acquisitions, and重组 to enhance scale and集团化水平.联储 Securities suggests that in 2026, profits in the aluminum industry chain may further concentrate in the downstream smelting segment, with clear earnings growth potential for related companies, recommending attention to their investment value.
Guosen Futures believes the strong performance of nonferrous metals stems from the combined effect of macro-financial policies and structural supply-demand changes. The global interest rate cut cycle and a generally weaker US dollar, amid relatively loose liquidity, are driving funds into nonferrous metals for hedging. Particularly with rising demand from AI and new energy, and domestic "anti-involution" policies regulating competition, nonferrous metals, constrained by supply-side rigidity and stimulated by demand elasticity, are leading the 31 primary A-share sectors and are expected to maintain strong performance in 2026.
[The Nonferrous Metals Trend is Here, the "Super Cycle" is Unstoppable] Different nonferrous metals have varying景气度, rhythms, and drivers, making divergence inevitable. For those看好 the sector, a simpler approach to capture the broader beta is through comprehensive exposure. The Nonferrous Metals ETF Huabao (159876) and its Link Fund (Class A: 017140, Class C: 017141), which cover industry leaders, provide broad exposure to copper, aluminum, gold, rare earths, lithium, and other sub-sectors. Compared to investing in a single metal, this offers risk diversification and is suitable as part of an investment portfolio.
Data source: CSI Index Company, Shanghai, Shenzhen, Hong Kong Exchanges, etc. Note: "First in the market" refers to the first ETF tracking the CSI Hong Kong Stock Connect Information Technology Composite Index.
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