In early trading today (December 19), the nonferrous metals sector surged from negative territory to positive, with Huabao Nonferrous Metals ETF (159876), the largest ETF tracking the sector, rising 0.44% intraday and currently trading above all moving averages.
Among constituent stocks, Western Superconductor gained over 3%, while Lizhong Group and Chujiang New Materials rose more than 2%. Tianshan Aluminum, Shenghe Resources, and China Rare Earth also followed the upward trend. Among heavyweight stocks, Aluminum Corporation of China (Chalco) and China Northern Rare Earth (Group) High-Tech Co., Ltd. climbed over 1%, while Zijin Mining and CMOC Group also turned green.
On the news front, a spokesperson for the Ministry of Commerce stated that China has received and approved some general export license applications from domestic exporters. Applications for rare earth exports meeting civilian and compliance requirements will be promptly approved, potentially easing global supply chain tensions.
Industry experts highlight that the Ministry of Commerce’s stance on rare earth export controls presents four key bullish factors for the sector: 1. **Improved Approval Efficiency**: Transitioning from case-by-case approvals to general licenses significantly streamlines export procedures and enhances order execution. 2. **Higher Industry Concentration**: General licenses prioritize compliant industry leaders, reinforcing market consolidation and accelerating the exit of non-compliant small and medium enterprises. 3. **Price Support**: Tighter supply controls and guaranteed demand fulfillment under general licenses optimize supply-demand dynamics, driving steady price increases. 4. **Strategic Revaluation**: The dual-use (civilian and military) nature of rare earths, coupled with export controls, strengthens China’s resource leverage and consolidates its position in the global supply chain.
Looking ahead, CITIC Securities notes that amid heightened macroeconomic volatility and geopolitical tensions in Q4, nonferrous metals—with their supply-demand rigidity, policy tailwinds, and safe-haven appeal—are emerging as core long-term investment assets.
Institutions broadly anticipate a continued bull run for the sector: Zhongtai Securities forecasts a comprehensive rally, CITIC Securities expects further upside, and China Securities Co. sees sustained investor interest in commodities.
**[Cyclical Upswing: The Nonferrous Metals Rally May Persist]** Given varying growth drivers and timing across different metals, diversification is key to capturing sector-wide beta. Huabao Nonferrous Metals ETF (159876) and its feeder funds (Class A: 017140; Class C: 017141) offer exposure to copper, aluminum, gold, rare earths, lithium, and more, mitigating single-commodity risks and serving as an optimal portfolio component.
Notably, on December 19, Huabao CSI Nonferrous Metals ETF rebranded, changing its on-market ticker from "Nonferrous Leaders ETF" to "Huabao Nonferrous Metals ETF."
**Risk Disclosure**: The ETF passively tracks the CSI Nonferrous Metals Index (base date: December 31, 2013; launch date: July 13, 2015). The index’s annual returns for the past five years are: 2020: +35.84%; 2021: +35.89%; 2022: -19.22%; 2023: -10.43%; 2024: +2.96%. Constituent stocks are adjusted per index rules, and past performance does not indicate future results. Stock mentions are illustrative and not investment advice or indicative of fund holdings. The fund is rated R3 (moderate risk) and suitable for balanced (C3) or higher-risk investors. Investment decisions based on this information are solely at the investor’s discretion. No liability is assumed for direct or indirect losses arising from its use.
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