HK Stock Market Move | CHINAHONGQIAO (01378) rose more than 4% as JP Morgan believes that the market undervalues the risk of aluminum supply disruptions, and that there is strong upward momentum in aluminum prices.

CHINAHONGQIAO (01378) rose more than 4%, as of the time of writing, it rose 4.21% to 40.14 Hong Kong dollars, with a turnover of 5.34 billion Hong Kong dollars. On the news front, in recent days, the escalating Middle East situation has led to unforeseeable factors in the electrolytic aluminum industry. JP Morgan believes that the market underestimates the supply disruption risk in the aluminum industry. The annual aluminum production in the Middle East region is 6.8 million tons, with a net export surplus of about 5 million tons per year, accounting for 7% of global aluminum production. JP Morgan estimates that if there is a substantial interruption in aluminum supply in the region, aluminum prices may quickly rise to $4,000 per ton, becoming the most strong upward asymmetrical variety among basic metals. The rise in energy costs and shipping costs, which account for one-third of smelting costs, will also further push up aluminum prices. The bank believes that if there is a disruption in the aluminum supply, CHINAHONGQIAO will become a core beneficiary. Guotai Haitong pointed out that the escalation of geopolitical conflicts in the Middle East has increased risk aversion among investors, supply disruptions are frequent, Qatar's aluminum industry has started production stoppage due to a suspension of natural gas supply, and Bahrain's aluminum industry transportation is hindered due to geopolitical conflicts. Meanwhile, the Mozambican aluminum plant announced plans to enter maintenance shutdown due to issues with its electricity contract. Demand is still in the recovery stage, with domestic social inventories continuing to accumulate. If geopolitical conflicts persist, strong expectations for tight global electrolytic aluminum supply will provide strong upward momentum for aluminum prices.