Markets took a breather on Wednesday (August 19), with all major A-share indices closing in the red, yet the precious metals sector stood out by attracting net main capital inflows of 2.013 billion yuan, ranking first across all Shenwan secondary industries. Shandong Gold Mining Co., Ltd. led the charge with net main capital inflows of 1.274 billion yuan, clinching the top spot on the A-share capital attraction leaderboard.

On the ETF front, the non-ferrous metals-focused Huabao Color Metals ETF (159876), which captures leading players across the sector, pulled back in line with the broader market. Shenzhen Stock Exchange data shows the fund closed on-exchange at 0.972. Notably, according to fund announcements, the ETF executed a 1:2 share split on August 1, 2025, lowering the unit net value by increasing share count while keeping total fund assets unchanged, thereby reducing the entry threshold. For existing holders, total personal assets and underlying investments remain unaffected.

Among constituent stocks, Jintian Copper surged over 8%, Shandong Gold Mining Co., Ltd. climbed more than 6%, while Nanshan Aluminum and Western Gold each gained over 3%, leading the advancers. On the flip side, Srisai New Materials dropped over 8%, with Xiamen Tungsten, Yinxing Tin, and Tin Industry Co. all falling more than 7%, dragging index performance.

Why did the non-ferrous sector show weakness today? Huabao Fund's Index R&D Investment Department provided a rapid-fire analysis, pointing to three disruptive factors: an overnight dip in the Nasdaq, a modest rebound in crude oil prices dampening risk appetite, and a star IPO siphoning capital away from the sector. However, the fundamental picture for non-ferrous metals has not deteriorated—some segments are even showing marginal improvement—reaffirming the earlier stance of a bullish medium-to-long-term trajectory for the sector.

Breaking down the sub-sectors: First, precious metals. The narrative for gold may be shifting toward the "second derivative peak in tech capital expenditure." As computing power investment expansion slows, industry chain profit expectations weaken, inflationary pressures ease, and room for Fed rate cuts opens up. Falling rate expectations could drive capital from tech back into precious metals, benefiting gold. Yet, transmission from this tech capex narrative to US fiscal dynamics will take time. Eventually, as the US K-shaped economy—slowing upper-half growth and a factually weakening lower-half small non-farm payrolls—becomes more apparent, skepticism toward US Treasuries and fiscal policy will intensify. The Fed may be compelled to resume rate cuts, and the de-dollarization narrative could re-emerge as a core market pricing driver, potentially pushing gold to new highs.

Second, industrial metals. Price pullbacks are feeding demand, with overall support staying firm. In copper, after speculative squeeze sentiment eased, prices have retreated, but the decline is spurring downstream demand improvements, with industry expectations for price support turning more positive. For aluminum, market views on next year's prices diverge widely, yet even at a price of 22,000 yuan per ton, the sector still offers attractive dividend yields (today's aluminum price: 23,700 yuan per ton). With gold and copper prices trending up, being overly bearish on aluminum seems unwarranted, and the high-dividend attribute of the electrolytic aluminum sector provides a margin of safety. In tin, the "computing power metal" shows significant price elasticity, with inventories continuing to draw down recently and supply-demand dynamics staying tight.

Third, minor metals. With rigid supply and strategic attributes, elasticity is ample. Supply-side constraints are pronounced, while demand benefits from AI hardware ramp-ups. Price movements track tech sector beta, and combined with strategic resource status, the segment offers considerable upside flexibility.

In summary, the non-ferrous sector currently sits in a fundamental-right, macro-left phase. Modest metal price pullbacks are actually stimulating end-demand improvements, and the realization of macro headwinds represents a clearing of negative factors for the sector. The operational approach should favor accumulating on dips, with opportunistic adding on significant pullbacks, while awaiting macro pressure to fully dissipate and positioning for medium-to-long-term allocation value.

Worth watching, the Fed will release minutes from its July monetary policy meeting at 2:00 AM Beijing time Thursday. Following relatively benign inflation data after the July meeting, markets have already trimmed expectations for a September rate hike. According to CME's FedWatch tool, the probability of rates staying unchanged in September stands at 65%, with a 35% chance of a 25-basis-point hike. Industry insiders suggest that cooling rate-hike expectations could pressure the US dollar and Treasury yields, with real rate expectations trending lower—a tailwind for dollar-denominated non-ferrous metals.

With earnings beats and low-level consolidation, a rebound from oversold conditions may be on the horizon. Different non-ferrous metals vary in cyclical strength, pace, and drivers, making divergence inevitable. For those bullish on the sector, a simpler approach is full coverage to capture the overall beta. The Huabao Color Metals ETF (159876) and its feeder funds (Class A: 017140, Class C: 017141) track an index that comprehensively spans copper, aluminum, rare earths, gold, lithium, tungsten, molybdenum, and tin, offering full-category exposure across precious, industrial, energy, and strategic minor metals. This provides better beta capture for the entire sector, with heavyweight holdings including industry leaders like Zijin Mining, Luoyang Molybdenum, China Northern Rare Earth, Aluminum Corporation of China, and Zhongjin Gold. Additionally, the ETF is a margin trading target, serving as an efficient one-stop tool for non-ferrous metals allocation.

Source: Shanghai and Shenzhen stock exchanges, as of August 19, 2026. Note: All stocks mentioned are constituent holdings of the Huabao Color Metals ETF (159876) index. As of end-July, their weightings are: Jintian Copper, 0.40%; Shandong Gold Mining Co., Ltd., 2.38%; Nanshan Aluminum, 1.52%; Western Gold, 0.33%; Srisai New Materials, 0.51%; Xiamen Tungsten, 2.45%; Yinxing Tin, 2.11%; Zijin Mining, 11.93%; Luoyang Molybdenum, 7.97%; China Northern Rare Earth, 4.70%; Aluminum Corporation of China, 3.55%; Zhongjin Gold, 3.13% (presented in article order). Index constituents are shown for illustrative purposes only; individual stock descriptions do not constitute investment advice of any form, nor do they represent the holdings or trading activity of any fund under the manager. Fee disclosure: When subscribing or redeeming fund shares, agents may charge commissions up to 0.5%. On-exchange trading fees are subject to actual charges by securities firms. The ETF does not charge sales service fees. Risk warning: The Huabao Color Metals ETF passively tracks the CSI Non-Ferrous Metals Index, with a base date of December 31, 2013, and a launch date of July 13, 2015. Constituent composition adjusts per index rules; backtested historical performance does not guarantee future index returns. The fund's risk rating is R3-medium risk, suitable for balanced (C3) and above investors; suitability matching opinions are subject to sales institutions. Any information herein (including but not limited to stocks, commentary, forecasts, charts, indicators, theories, or 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, nor do they bear liability for direct or indirect losses arising from use of this content. Fund investing carries risks; past performance does not indicate future results, and performance of other funds under the manager does not guarantee fund performance. Invest cautiously.