As the release of July US CPI data approaches, hawkish comments from Federal Reserve officials have intensified. On August 12, the nonferrous metals sector defied headwinds to climb steadily, with the largest and most liquid ETF tracking the same index, HuaBao Nonferrous Metals ETF (159876), hitting a high of 1.1% during intraday trading. Strong fundamentals combined with low valuations are driving capital inflows to seize the rebound opportunity. The ETF attracted 17.74 million yuan in a single day yesterday, and over the past 10 trading days, it has accumulated a staggering 138 million yuan in net inflows.
Among its component stocks, aluminum sector leaders posted significant gains. Aluminum companies accounted for six of the top ten performers in the ETF, with Tianshan Aluminum surging over 5%, Zhongfu Industrial rising more than 4%, and Nanshan Aluminum and Yunnan Aluminium both climbing over 3%. Additionally, small metal leader Yunnan Germanium gained more than 3%, while Huaxi Nonferrous Metals rose over 2%.
The US Department of Labor will release the July CPI data at 8:30 PM Beijing time, a key factor influencing the Fed's decision on a potential September rate hike and likely forcing traders to recalibrate their positions. Interest rate swap markets indicate that traders see roughly a 50-50 chance of a 25 basis point rate hike next month. Earlier, HuaBao Fund interpreted that moderate Fed rate hikes are a short-term headwind but a long-term positive, emphasizing that the key lies in the underlying demand for nonferrous metals. The market currently expects a gradual and moderate pace of rate hikes. Historical analysis shows that copper prices typically rise during Fed tightening cycles, with the core reason being that such hikes often follow periods of economic overheating, strong manufacturing activity, and AI investment booms. While liquidity concerns may suppress the nonferrous metals sector around the time of rate hikes, the commodity attributes (supply-demand fundamentals) of nonferrous metals will ultimately outweigh financial attributes (interest rates/dollar) over the medium to long term.
The sharp decline in the nonferrous metals sector on Tuesday (August 11) was likely driven more by short-term emotional disruption than by a fundamental deterioration of the sector. The tight supply-demand balance in the medium to long term remains intact, and a recovery rally is expected to continue once macro sentiment stabilizes. On the fundamentals side, as of August 11, 7 of the 60 component stocks in the underlying index of the HuaBao Nonferrous Metals ETF (159876) have released their 2026 semi-annual reports. All disclosed components reported profits, with three companies doubling their net profit attributable to parent company year-over-year. Zhongfu Industrial leads with a 165.84% increase in net profit attributable to parent company. As a sector that had previously reported positive earnings forecasts, it continues to attract market attention.
From a valuation perspective, the nonferrous metals sector currently offers a strong margin of safety. First, on a cross-sector comparison within the Shenwan first-level industry classification, the PE (TTM) of nonferrous metals is at a mid-to-low level, with significantly less valuation pressure than most other sectors. Second, looking at historical trends, the PE of the CSI Nonferrous Metals Index is near its three-year median, indicating it has not overly priced in future growth expectations. Third, comparing domestic and international markets, using Zijin Mining (A-shares) and Southern Copper Corporation (US stocks) as examples, Zijin Mining trades at a notably lower valuation than Southern Copper, highlighting a significant global pricing discount for A-share nonferrous metals leaders. Given the strong fundamentals and low valuations, the Index Research and Investment Department of HuaBao Fund recommends focusing on the right-side allocation value of the sector. Overall, the headwinds that caused the sector's pullback since March may have largely dissipated. Current commodity price stability supports corporate earnings, and leading companies still have production growth contributions, providing high earnings certainty. Low valuations combined with high growth potential make the current period a prime window for allocating to the nonferrous metals sector.
With positive earnings forecasts and accumulating strength after a pullback, a rebound is expected. Different nonferrous metals have varying cycles, growth drivers, and catalysts, making differentiation inevitable. For investors bullish on the sector, a simpler approach is to use a comprehensive coverage ETF to capture the sector's beta. The HuaBao Nonferrous Metals ETF (159876) and its linked funds (Class A: 017140, Class C: 017141) track an index that fully covers copper, aluminum, rare earths, gold, lithium, tungsten, molybdenum, tin, and other industries. This full-category coverage allows for better capture of the sector's overall beta. Additionally, the ETF is a margin trading and securities lending target, serving as an efficient tool for a one-click investment in the nonferrous metals sector. As of August 11, the HuaBao Nonferrous Metals ETF (159876) had a net asset value of 1.631 billion yuan and an average daily trading volume of 104 million yuan this year, making it the largest and most liquid ETF among the three funds tracking the CSI Nonferrous Metals Index on the market. Data sourced from the Shanghai and Shenzhen stock exchanges and others, as of August 12, 2026. For ETF-related fees, investors may be charged a commission of up to 0.5% by their subscription and redemption agent. On-exchange trading fees are subject to the actual charges by securities firms. The ETF does not charge a sales service fee. Risk warning: The HuaBao Nonferrous Metals ETF passively tracks the CSI Nonferrous Metals Index, which was established on December 31, 2013, and released on July 13, 2015. The index's constituent stocks are adjusted according to its compilation rules. Past performance of back-tested historical data does not guarantee future index performance. The component stocks mentioned in this article are for display purposes only and do not constitute investment advice or represent the holdings or trading strategies of any fund managed by the fund manager. The fund manager assesses this fund's risk level as R3-Medium Risk, suitable for balanced (C3) and above investors. Please refer to the sales institution for suitability matching opinions. Any information in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors are solely responsible for their own investment decisions. Furthermore, any views, analyses, or forecasts in this article do not constitute investment advice to readers, and the author is not liable for any direct or indirect losses arising from the use of this content. Fund investment involves risk. Past performance of a fund does not guarantee its future performance. The performance of other funds managed by the same manager does not guarantee the performance of this fund. Invest in funds with caution.
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