On Thursday (August 6), the non-ferrous metals sector led the broader market, with the Huabao Non-Ferrous Metals ETF (159876) 鈥?the largest and most liquid ETF tracking the same underlying index 鈥?opening with a gap up. Intraday gains reached as high as 2.45%, currently trading up 2.35% with a real-time turnover exceeding 52 million yuan, reflecting robust trading activity. With strong earnings forecasts and prices at low levels, capital is actively positioning for a rebound from oversold conditions. The Huabao Non-Ferrous Metals ETF (159876) has seen net inflows of 59.01 million yuan over the past three days, and over the longer term, cumulative net inflows have reached 176 million yuan in the previous ten trading days.

Among its constituent stocks, the indium concept stock Yunnan Lincang Xinyuan Germanium Industry Co.,Ltd. hit its third consecutive daily limit, while the semiconductor materials concept stock Youyan New Materials hit its second consecutive daily limit. Gold sector leaders Western Gold, Shanjin International, and Zhongjin Gold all rose more than 6%. Heavyweight stocks Zijin Mining, CMOC Group, and Northern Rare Earth gained over 2%.

Market Dynamics and Analyst Views

On the news front, spot gold surged toward $4,300 per ounce. CITIC Securities believes gold remains in a major bull market, supported by factors such as the accelerating expansion of the U.S. fiscal deficit, widening geopolitical rifts under deglobalization, and sustained central bank gold purchases. The current pullback is approaching historical extremes, and the $4,000 per ounce level is likely the bottom area for this cycle. Looking ahead, the impact of the Strait of Hormuz situation on gold prices is expected to shift from a drag to a tailwind. The Federal Reserve's monetary policy may be more accommodative than the market anticipates, and with U.S. military spending surging, driving up the deficit, gold prices are expected to return to an upward trend within the year.

It is noteworthy that the total U.S. national debt has exceeded $40 trillion, with the 30-year yield soaring to 5.23%, highlighting liquidity pressures under massive debt. Meanwhile, easing geopolitical tensions have pushed oil prices below $70 a barrel, meaning inflation is no longer a core constraint. Combined with global central banks purchasing over 280 tons of gold in the second quarter, the de-dollarization theme is solidifying the bottom for gold prices. As expectations for a Fed policy shift grow, the sector is entering an excellent right-side buying opportunity.

Fundamental Support and Valuation Appeal

The Index Research and Investment Department of Huabao Fund pointed out that the non-ferrous metals sector offers strong fundamentals combined with low valuations, recommending investors pay attention to the sector's right-side allocation value. Overall, the factors that had been suppressing the sector since March appear to have largely been eliminated. The current stabilization of commodity prices supports corporate earnings, and leading companies still have production growth contributions, resulting in high earnings certainty. With low valuations and high growth certainty, this is a prime window for allocating to the non-ferrous metals sector.

On the fundamentals side, the non-ferrous metals sector is experiencing a wave of positive earnings pre-announcements. As of August 3, among the 60 constituent stocks of the underlying index for the Huabao Non-Ferrous Metals ETF (159876), 39 listed companies have already released their H1 2026 earnings forecasts. All of them are expected to be profitable and show growth. Zijin Mining is expected to lead with a maximum net profit attributable to shareholders of 39.1 billion yuan, followed by CMOC Group and Aluminum Corporation of China, with expected maximum net profits of 16.5 billion yuan and 12.2 billion yuan, respectively.

Investment Approach and Product Features

A rebound from oversold conditions is anticipated. Different non-ferrous metals have varying cycles, drivers, and paces, making divergence inevitable. For those bullish on the sector, a more straightforward approach is to use broad coverage to capture the overall beta of the non-ferrous metals market. The Huabao Non-Ferrous 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, tin, and other industries. This full-category coverage allows investors to better capture the sector's beta. The ETF also supports margin trading and is an efficient tool for a one-click allocation to the non-ferrous metals sector. As of the end of July, the Huabao Non-Ferrous Metals ETF (159876) had a total net asset value of 1.489 billion yuan and an average daily turnover of 104 million yuan this year, making it the largest and most liquid ETF among the three ETFs tracking the CSI Non-Ferrous Metals Index in the entire market.