Nonferrous metals stocks tracked the broader market's fluctuations on Friday, initially rising in the morning before retreating, then launching another offensive in the afternoon. The sector attracted over 6.1 billion yuan in net main capital inflows for the day, ranking third among the 31 Shenwan primary industries. The Huabao Nonferrous Metals ETF (159876), which tracks the largest and most liquid index of its kind, saw its intraday price climb as much as 1.34%, eventually closing 1.14% higher. Total turnover for the day reached 91.85 million yuan, a 24% increase from the previous session. Bolstered by strong fundamentals and low valuations, capital actively seized the opportunity for a rebound from oversold levels. The ETF received a net inflow of 31.2 million shares throughout the day, building on a single-day capital influx of 10.64 million yuan the prior day. Over the past 20 trading days, it has accumulated total net inflows of 124 million yuan.
Among the constituent stocks, rare earth leaders significantly outperformed. China Rare Earth Holdings hit its daily limit up, while Zhongxi Nonferrous, Shenghe Resources, and Northern Rare Earth all rose over 4%. Potentially driven by the release of a national liquid cooling standard, copper processing leader Jintian Copper also hit its daily limit up. Additionally, stocks such as Huaxi Nonferrous, Sinomine Resource Group, and Xiamen Tungsten followed the upward trend.
Reasons for the Rally
The rise in the nonferrous metals sector on Friday was primarily supported by two key factors: improved macro liquidity and a boost in industry sentiment. On the macro front, after the previous day's US July CPI inflation data met expectations, the Thursday-released US July PPI also showed a moderate increase, indicating further easing of inflationary pressures. Following the data release, US stock index futures rose, and US Treasury yields fell. Traders further lowered their expectations for a Fed rate hike in September. China International Capital Corporation (CICC) noted that with cooling US inflation, slowing employment data, and the Fed's dovish turn, global liquidity is expected to ease further in the second half of 2026, which should benefit nonferrous metals.
Rare Earth Sector Dynamics
In the focal industry of rare earths, a clear pattern of "low volume, high prices" has emerged. From January to July 2026, China's total rare earth export volume was 34,706.3 tons, a 10% year-on-year decrease. While export volumes fell, the average export price doubled year-on-year. Rising rare earth prices have directly boosted company profits. According to SMM data, among the 10 rare earth-related companies that have released their half-year reports, performance forecasts, or preliminary results, all achieved varying degrees of profit growth in the first half of the year. Guosheng Securities pointed out that permanent magnet materials are the most significant and promising downstream application field for rare earths, accounting for over 60% of total rare earth functional materials. New energy vehicles and embodied intelligent robots are key demand drivers. CICC believes that entering the second half of the year, the peak production and sales season for downstream industries like automotive and industrial robots will likely see raw material procurement ramp up, potentially opening up incremental space. Rare earth prices have fundamental support.
Market Outlook
BOC International Securities indicated that the macro environment and improving corporate earnings in the nonferrous metals sector both support a transition from a rebound to a reversal. Should the broader market enter a recovery phase, the high-beta nonferrous metals sector, with its strong offensive attributes, is expected to outperform the broader market, making it a highly attractive allocation opportunity at this point. With positive earnings pre-announcements and a position of low-level accumulation, a rebound from oversold conditions is anticipated. The Huabao Nonferrous Metals ETF (159876) and its linked funds (Class A: 017140, Class C: 017141) track an index that comprehensively covers copper, aluminum, rare earths, gold, lithium, tungsten, molybdenum, and tin. This full-sector coverage allows for better capture of the sector's beta returns. Additionally, this ETF is a margin trading target, serving as an efficient tool for one-click investment in the nonferrous metals sector. As of August 13, the Huabao Nonferrous Metals ETF (159876) had a net asset value of 1.59 billion yuan and an average daily turnover of 104 million yuan this year, making it the largest and most liquid ETF among the three tracking the CSI Nonferrous Metals Index in the market.
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