On Friday, March 13th, the market experienced consolidation, with major A-share indices closing in negative territory. The Nonferrous Metals ETF (159876), which provides comprehensive exposure to industry leaders in gold, rare earths, copper, aluminum, and other nonferrous metals, saw its intraday price rise by up to 1.37% in the morning session before pulling back with the broader market. The decline accelerated towards the close, with the ETF ultimately finishing down 2.41%.
Data from the Shenzhen Stock Exchange reveals that the Nonferrous Metals ETF (159876) attracted a net inflow of 110 million yuan over the past 10 days. This indicates that capital remains confident in the future performance of the nonferrous metals sector, choosing to position itself ahead of time despite market volatility.
Among the constituent stocks, copper leader Hailiang Co., Ltd. led the gains, rising over 5%. Lithium leaders Shenzhen Senior Technology Material Co., Ltd. and Tianqi Lithium Corporation also advanced more than 1%. On the downside, tungsten leader Xiamen Tungsten Co., Ltd. fell over 8%, while copper leader Baiyin Nonferrous Group Co., Ltd. and gold leader Hunan Gold Corporation declined more than 4%, weighing on the index performance.
On the macroeconomic front, escalating geopolitical conflicts in the Middle East have driven energy prices higher, fueling US inflation and diminishing expectations for interest rate cuts by the Federal Reserve. Concurrently, a strong rebound in the US dollar index has put downward pressure on internationally traded commodities like gold, silver, and copper. Analysts note that the previously supportive macro backdrop of relatively loose global fiscal and monetary policies, which underpinned the "bull market" for nonferrous metals, is now facing headwinds as rate cut expectations recede, creating some drag on metal prices.
However, from an industrial perspective, there is anticipation for the traditional peak consumption season. Manufacturing PMI data for the Northern Hemisphere in February remained generally stable, suggesting that manufacturing activity could transition into a seasonal upturn relatively quickly. Additionally, expectations of front-loaded exports in sectors like lithium batteries and photovoltaics are providing support for demand for certain metals.
Notably, the conflict in the Middle East has strengthened the supply constraint narrative for aluminum, contributing to its relatively strong price performance. Given that the region accounts for approximately 9% of global primary aluminum production capacity, analysts suggest that prolonged blockage of the Strait of Hormuz could lead to sustained significant increases in oil, gas, and overseas electricity prices. As one of the most electricity-intensive metals, the aluminum industry is particularly sensitive to changes in energy costs.
Looking ahead, analysts indicate that if inflation stemming from geopolitical tensions can be contained within a reasonable range, the nonferrous metals sector could still maintain a relatively optimistic trajectory for the year under a broadly accommodative macro environment. The extent of price increases for individual metals will depend on the severity of supply constraints at the mine level and their linkage to emerging demand trends.
The Nonferrous Metals ETF (159876) and its linked funds track an index that comprehensively covers sectors including copper, aluminum, gold, rare earths, and lithium, encompassing different cycles such as precious metals (for hedging), strategic metals (for growth), and industrial metals (for recovery). This broad coverage allows for better capture of the sector's beta movements. Furthermore, as a securities margin trading target, this ETF offers an efficient tool for gaining exposure to the nonferrous metals sector.
As of the end of February, the Nonferrous Metals ETF (159876) had a net asset value of 2.427 billion yuan, with an average daily trading volume exceeding 100 million yuan over the past month. Among the three ETFs tracking the same underlying index in the market, it leads in both size and liquidity.
It is important to note that the Nonferrous Metals ETF passively tracks the CSI Nonferrous Metals Index. The index's past performance, including its fluctuations over recent years, is not indicative of its future results. Descriptions of constituent stocks are for illustrative purposes only and should not be construed as investment advice or indicative of the fund manager's holdings. The fund is rated as medium risk (R3) and may be suitable for investors with a balanced (C3) or higher risk profile. All investment decisions carry risk, and investors should be aware that past performance does not guarantee future returns.
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