Non-ferrous metals under short-term pressure, but future outlook promising? Three core supports remain solid, Huabao Fund Non-ferrous ETF (159876) attracts 120 million yuan in capital allocation!

On Thursday, March 12, all major A-share indices closed in the red. The broad-based Gold, Rare Earths, Copper, Aluminum, and other non-ferrous metal industry leaders’ ETF (159876) traded within the market early in the session, reaching a high of 0.43%. Later, it consolidated and pulled back, ultimately closing down 0.77%. According to the Shenzhen Stock Exchange, this ETF had attracted a total of 1.2 billion yuan in net inflows over the past 10 days, reflecting investors’ confidence in the future prospects of the non-ferrous metals sector and their active participation in buying.

The leading aluminum companies led the gains! Among the top 10 constituents of the non-ferrous ETF (159876), seven are aluminum industry leaders. Shenhuo Shares rose over 6%, China Aluminum increased more than 5%, and Yunnan Aluminum gained over 4%. Additionally, among the rare earth leaders, Rare Earths & Metals rose over 4%, and the gold leader Chifeng Gold increased over 1%. On the other hand, copper giant Luoyang Molybdenum, lead-zinc leader Xingye Silver & Tin, and lithium leader Yongxing Materials all fell more than 3%, dragging down the index.

Why has the performance of the non-ferrous metals sector recently been lackluster? On the macro level, amid Middle East geopolitical conflicts, energy prices surged, U.S. inflation heated up, and expectations for Federal Reserve rate cuts weakened. Meanwhile, the U.S. dollar index rebounded strongly, putting pressure on international commodity prices such as gold, silver, copper, and others.

It is worth noting that the core supporting logic behind the rising price center of the non-ferrous metals sector has not changed:

1. The supply-demand tight balance remains unbroken. Over the past few years, global mining capital expenditure has been insufficient for a long time, with very limited new capacity added for key commodities like copper and bauxite. Coupled with frequent geopolitical conflicts and ongoing disruptions at the mining end, rigid constraints on supply still exist, and the medium- to long-term supply-demand gap remains clear.

2. The demand from emerging industries has not disappeared. The development of AI computing power drives demand for power infrastructure, and industries such as new energy vehicles, photovoltaics, and wind power are growing rapidly, supporting long-term growth in demand for copper, rare earths, aluminum, and other non-ferrous metals, solidifying the sector’s fundamental value.

3. The global monetary easing trend remains unchanged. Although short-term expectations for Fed rate cuts fluctuate, the market generally expects the Fed to implement 1-2 rate cuts by 2026, providing medium- to long-term support for non-ferrous metal prices.

Looking ahead, Guotai Haitong Securities states that under the tight supply-demand balance, monetary policy, macro expectations, geopolitical games, and supply disruptions will be key factors influencing non-ferrous metal prices. CICC believes that, in the future, rising geopolitical risks and diminishing peace dividends are highly probable, and the acceleration of global re-industrialization may sustain the upward cycle of non-ferrous metals.

【The non-ferrous metals boom has arrived, and the “super cycle” is unstoppable】

The Huabao (159876) non-ferrous ETF and its associated funds (Class A: 017140, Class C: 017141) fully cover industries such as copper, aluminum, gold, rare earths, and lithium, including precious metals (hedging), strategic metals (growth), and industrial metals (recovery). This comprehensive coverage allows better capture of the sector’s beta movements across different economic cycles. Additionally, this ETF is a margin trading and short-selling target, making it an efficient tool for one-click exposure to the non-ferrous metals sector.

As of the end of February, Huabao (159876) had a latest scale of 2.427 billion yuan, with an average daily trading volume exceeding 100 million yuan over the past month. Among all ETFs tracking the same index in the market, it ranks first in both size and liquidity.

*Institutional views are based on sources: ① Guotai Haitong Securities’ March 9 report “Non-Ferrous Metals: Geopolitical Disruptions Do Not Change the Upward Volatility”; ② CICC’s March 12 report “Rising Geopolitical Risks Increase Market Volatility, A-shares Show Resilience.”

Note: The previous on-market abbreviation for Huabao non-ferrous ETF (159876) was “Non-Ferrous Leader ETF.”

ETF fee-related notes: When investors subscribe or redeem fund shares, the authorized agencies may charge a commission of up to 0.5%. On-market trading fees are based on the actual charges by securities firms. The ETF does not charge sales service fees.

Associated fund fee notes: Huabao CSI Non-Ferrous Metals ETF Initiated Fund (Class A) has a subscription fee of 1,000 yuan per transaction for subscriptions of 2 million yuan or more, 0.6% for 1-2 million yuan, and 1% for less than 1 million yuan. Redemption fees are 1.5% if held less than 7 days, and 0% if held 7 days or more, with no sales service fee. Huabao CSI Non-Ferrous Metals ETF Initiated Fund (Class C) does not charge a subscription fee; redemption fee is 1.5% if held less than 7 days, 0% otherwise; sales service fee is 0.3%.

Risk warning: Huabao non-ferrous ETF passively tracks the CSI Non-Ferrous Metals Index, which was launched on July 13, 2015, with a base date of December 31, 2013. The index’s annual returns over the past five full years are: 2021, 35.89%; 2022, -19.22%; 2023, -10.43%; 2024, 2.96%; 2025, 91.67%. The index components are adjusted periodically according to the index rules. Past performance does not predict future results. The constituent stocks shown are for illustration only; descriptions do not constitute investment advice and do not reflect holdings or trading activity of any funds managed by the manager. The risk level of this fund is rated R3—medium risk, suitable for balanced (C3) and above investors. Suitability opinions are subject to sales institutions’ assessments. All information in this document (including stocks, comments, forecasts, charts, indicators, theories, and any other statements) is for reference only. Investors are responsible for their own investment decisions. The views, analyses, and forecasts in this document do not constitute investment advice, and the manager is not responsible for any direct or indirect losses resulting from the use of this content. Investment in funds involves risks; past performance is not indicative of future results. The performance of other funds managed by the manager does not guarantee future performance. Please invest cautiously.