Hong Kong stock concept tracking|Optimistic mood warms up as interest rates fall. Copper prices reach a 15-month high (with concept stocks).

Driven by a growing risk preference sentiment, copper prices surged to a 15-month high, with traders preparing for an expected rate cut by the Federal Reserve this week and seeking clues for further easing policies later this year. London Metal Exchange copper futures rose by 1% to $10,173 per ton, reaching the highest level since June 2024. Investors are expecting a 25 basis point rate cut this week, as signs of weakness in the labor market have emerged and the possibility of two more rate cuts before the end of the year has been priced in by the money market. Rate cuts usually support prices of commodities like copper by boosting demand and weakening the dollar, making it easier for buyers using other currencies to afford. Bank of America Securities released a research report stating that copper supply remains tight due to operational disruptions, such as reduced production at the Kamoa-Kakula Mine, the shutdown of Codeco's El Teniente Mine, and Chilean production remaining at long-term average levels. However, copper demand remains robust, benefiting from growth in Chinese power grid investments in the second half of the year and the peak season for electric vehicle sales. Citic Securities released a research report stating that the domestic copper mining sector has seen a continuous increase in valuation since the beginning of the year, closely related to the decline in supply growth and strong domestic demand. Looking ahead, it is expected that the domestic copper mining sector will resonate in terms of profitability and valuation: 1) With further improvement in supply and demand expected for the year, the peak season effect and macroeconomic boost will push copper prices towards $10,500 per ton in 3Q-4Q, with the central price of copper expected to rise, leading to an improvement in corporate profit expectations; 2) The perception difference between supply shortages and demand growth has led to a valuation gap between domestic and overseas sectors, with expectations that the improved supply and demand awareness and increase in copper prices will drive the domestic valuation to continue rising to 15-20x. Hong Kong-listed companies in the copper mining sector include CMOC Group Limited (03993), Zijin Mining Group (02899), CHINFMINING (01258), MMG (01208), JIANGXI COPPER (00358), China Railway (00390), etc.