Driven by Federal Reserve rate cut expectations rising to 90%, the non-ferrous metals sector led market gains in early trading on August 25. The Non-Ferrous Metals Leader ETF (159876), which encompasses leading companies across the non-ferrous metals industry, opened with a significant gap up, with intraday prices rising 4.82% and receiving real-time net subscriptions of 11.4 million shares.

Among constituent stocks, Northern Copper hit the daily limit, while Jiangxi Copper and Northern Rare Earth surged over 8%. Heavyweight stock Luoyang Molybdenum gained more than 7%, and Zijin Mining rose over 5%.

On the capital flow front, nearly 12 billion yuan in major capital poured in. The non-ferrous metals sector's real-time capital inflow topped all 31 Shenwan Level-1 industries. Constituent stock Northern Rare Earth attracted over 2 billion yuan in net major capital inflow, ranking third on the A-share capital attraction list.

On the news front, Federal Reserve Chairman Powell stated at the Jackson Hole Global Central Bank Annual Conference on Friday evening that conditions indicate rising downside risks to U.S. employment, and changes in risk balance may constitute reasons for policy adjustments. Meanwhile, the Fed unanimously adopted a new policy framework, implementing flexible inflation targeting and eliminating the inflation "compensation" strategy. Powell's comments were more dovish than market expectations, leading traders to increase bets on Fed rate cuts in September and resume expectations for two rate cuts by year-end.

Industry professionals point out that Fed rate cuts benefit non-ferrous metals through four main channels: dollar depreciation leading to price increases, economic stimulus driving demand growth, cost reduction improving profitability, and inflation hedging attracting capital inflows. The positive impact of Fed rate cuts on non-ferrous metals essentially results from the combined effects of macro liquidity easing, dollar pricing mechanisms, industrial demand expectations, and strengthened financial attributes.

Additionally, on August 22, the Ministry of Industry and Information Technology, National Development and Reform Commission, and Ministry of Natural Resources jointly released the "Interim Measures for Total Volume Control Management of Rare Earth Mining and Separation," clarifying the strategic metal status.

CITIC Securities Construction Investment notes that under downstream restocking expectations, rare earth prices are more likely to rise than fall. Referencing historical trends of export-controlled metals, overseas high prices often drive domestic price increases, thickening corporate profits and bringing both valuation and profit improvements to the sector.

Looking ahead at the non-ferrous metals sector, CITIC Securities Construction Investment states that beyond monetary easing from the Fed's rate-cutting cycle, domestic "anti-involution" policies are optimizing production factors, enhancing profitability across all segments, and improving market expectations, facilitating the transmission of rising metal prices downstream. Furthermore, industrial metals sector valuations remain at relatively low levels, providing room for upward correction. A non-ferrous bull market driven by both EPS and PE expansion is beginning.

What is the allocation value of the Non-Ferrous Metals Leader ETF (159876)? Focus on four key investment logics:

1. Anti-involution policy support: The Ministry of Industry and Information Technology will introduce growth stabilization plans for ten key industries including non-ferrous metals.

2. Positive earnings outlook: As of July 31, among the 60 listed companies covered by the CSI Non-Ferrous Metals Index, 27 have disclosed interim earnings forecasts for 2025, with 22 forecasting profits (over 80%); 22 forecast positive year-over-year net profit growth, and 10 expect net profits to double, demonstrating operational resilience.

3. Industry-leading gains: As of July 31, the non-ferrous metals sector accumulated gains of 24.91% year-to-date, ranking first among 31 Shenwan Level-1 industries with a significant lead.

4. Low valuations: As of end-July, the CSI Non-Ferrous Metals Index had a price-to-book ratio of 2.36, at the 42.3% percentile since listing, representing historically low levels. CITIC Securities points out that current non-ferrous metals industry valuations remain at relatively low levels, making sector valuation recovery worth anticipating.

The 'metallic heart' of future industries and 'golden blood' of modern industry! According to Shenwan Level-3 industry classifications, as of end-July, the CSI Non-Ferrous Metals Index tracked by the Non-Ferrous Metals Leader ETF (159876) and its feeder funds (Class A: 017140, Class C: 017141) has sector weightings of 24.5% copper, 15.3% aluminum, 14.4% gold, 11.5% rare earth, and 8.2% lithium. Compared to investing in single metal industries, this provides risk diversification and is suitable as part of a diversified portfolio allocation.

Risk Disclosure: The Non-Ferrous Metals Leader ETF (159876) and its feeder funds (Class A: 017140, Class C: 017141) passively track the CSI Non-Ferrous Metals Index. The index base date was December 31, 2013, with publication date July 13, 2015. The index's returns for the past five complete years were: 2020: 35.84%; 2021: 35.89%; 2022: -19.22%; 2023: -10.43%; 2024: 2.96%. Index constituent composition is adjusted according to index compilation rules, and historical backtesting performance does not predict future index performance. Individual stocks mentioned serve only as examples and do not constitute investment advice, nor represent holdings or trading activities of any fund managed by the fund manager. The fund manager assesses this fund's risk level as R3-Medium Risk, suitable for balanced (C3) and above investors. Please refer to sales institutions for appropriate matching opinions. Any information in this article serves reference purposes only, and investors bear responsibility for autonomous investment decisions. Views, analyses, and forecasts do not constitute investment advice and bear no responsibility for direct or indirect losses from using this content. Fund investment carries risks, past performance does not guarantee future results, and performance of other funds managed by the fund manager does not guarantee fund performance. Invest cautiously.