Non-ferrous Metal Stocks Lead Declines in Hong Kong Market Amid Liquidity Squeeze and Precious Metals Sell-off

Stock News
Feb 13

Non-ferrous metal stocks were among the top decliners in the Hong Kong market. At the time of writing, CHINFMINING (01258) fell 5.27% to HK$14.91; ZIJIN MINING (02899) dropped 4.98% to HK$42.78; CMOC (03993) declined 4.71% to HK$22.24; and MMG (01208) decreased 4.54% to HK$9.89. The sell-off was triggered by a sudden shift toward "de-risking" in global financial markets, leading to heavy selling in precious metals. On Thursday, gold prices saw an intraday decline of up to 4.1%, while silver plummeted by as much as 11%. From an institutional perspective, risk aversion stemming from AI-related uncertainties in equity markets is spilling over into the metals sector. Macro strategist Michael Ball noted that the current downturn resembles a "momentum deleveraging" triggered by algorithmic and systematic trading strategies, particularly the typical behavior of programmatic trend-following funds reducing positions after key price levels were breached. However, Oriental Securities believes that the earlier liquidity shock has largely been absorbed, and metal prices are expected to realign with fundamentals. For industrial metals, while short-term expectations of monetary easing have been dampened, the broader trend toward interest rate cuts remains intact. Although copper and aluminum inventories have continued to accumulate over the past week, the rate of accumulation has slowed. Downstream processing negative feedback has weakened, and operating rates have held up reasonably well during the off-season. As prices undergo short-term adjustments, downstream acceptance has begun to improve significantly. Overall, metal varieties with improving supply-demand dynamics are expected to continue performing well.

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