Bank of America Merrill Lynch calls Chinese stock market "Metal Bull"! Aluminum sector first choice CHINAHONGQIAO (01378) raises target price to 48 Hong Kong dollars.

US banking giant Wall Street recently released a research report stating that in an environment of increasing market volatility, it still maintains a strong bullish stance on the Chinese stock metal markets such as gold, copper, aluminum, and lithium, focusing on "tighter supply + structural demand brought by electrification/AI big wave". Copper and aluminum markets are expected to continue to face severe supply deficits, so even with short-term fluctuations, the trend framework remains unchanged. In terms of equity assets, the "core recommendation" of the metal sector in the Chinese stock market and the list of preferred stocks in the metal market are explicitly given as Zijin Mining Group, Zijin Gold, Aluminum Corporation of China, CHINAHONGQIAO (01378), and Zhejiang Huayou Cobalt, among other popular metal stocks. US Bank is very optimistic about the structural opportunities in the metal sector of the Chinese stock market, with a focus on the demand resilience brought by electrification/AI infrastructure + supply constraints/capacity bottlenecks driving profit margins. Therefore, during a period of rising volatility, it still prefers to allocate to metal and resource stock leaders. The strategy team at US Bank stated that the key investment logic in the gold market remains "the bull market is still intact": weaker US dollar expectations, "strategic reserves" demand brought by policy/geopolitical uncertainty, ETF and strong central bank buying structural support, leading them to believe that the path to gold reaching $6,000 per ounce remains unchanged, with the central price of gold in 2026-27 still around $4,900-$5,000 per ounce. US Bank thinks that the copper metal market is more "commodity-driven". It expects a global copper supply deficit of about 50-60 thousand tons in 2026/27, emphasizing demand driven by electrification - the strong expansion of electric grid, EV, energy storage (ESS), and AI computing infrastructure. For the Chinese market, they expect copper demand to grow by about +2.5% in 2026, and believe that potential government "stocking/reserve" could also be a strong catalyst. US Bank is most bullish on the profit resilience of the aluminum sector in the Chinese metal market. The institution pegs the price of aluminum in the Chinese market at RMB 23,000/ton in 2026, and believes that industry profits are expected to remain in the historical high range of 6,000-7,000 yuan per ton. The driving factors behind the bullish market for aluminum are divided into five categories: (1) Chinese capacity nearing the ceiling of about 45 million tons; (2) Indonesian expansion constrained by factors such as power, slow overseas supply growth; (3) demand resilience brought by AI data centers, electric grids, energy storage, and EVs; (4) copper-aluminum ratio>4 bringing material substitution; (5) the addition of new loads for large AI inference systems and potential supply clearance, combined with the cost advantage of CHINA POWER. Regarding specific stock allocations, the US Bank strategy team explicitly lists Aluminum Corporation of China and CHINAHONGQIAO as the top picks for the aluminum theme sector, raising their earnings expectations for 2026, and providing valuation anchors: Aluminum Corporation of China at approximately 10 times 2026 earnings per share, with a dividend yield of about 5%; CHINAHONGQIAO at approximately 9 times 2026 earnings per share, with a dividend yield of about 7%. US Bank sets a target price of 48 Hong Kong dollars for CHINAHONGQIAO (further increasing from the previous optimistic target price of 45 Hong Kong dollars), with core reasons including the firm aluminum prices under the institution's revised framework, the unparalleled vertical integrated model of the company placing it in the lowest quartile of global cost curves in the long term, structural high dividend payouts (about 60% dividend payout rate mentioned in the US Bank report, with a dividend yield of about 7% in 2026) combined with stock repurchase support.