A-Share Materials Sector Up 15% in One Month: Gold and Copper Prices Drive Outperformance Across the Market
Nashnova编辑部
The MSCI China Materials Index rallied roughly 15% over the past month, outpacing every other major sector; synchronized strength in gold and copper is the engine, and valuations still sit below the broader market, suggesting this may be more than a short-term commodity trade.
How did materials go from laggard to leader?
Over the past month the MSCI China Materials Index gained about 15%, vaulting from one of the year's weakest sectors to the top of the leaderboard.
The rally runs on two legs: gold up, copper up. Both commodities moved higher together, lifting the entire sector.
This means → the move is not a single-commodity spike but a "twin-engine" trade — as long as gold and copper don't stall at the same time, the sector has a floor.
Where is the gold rally coming from?
The People's Bank of China added to its gold reserves for a 21st consecutive month, buying roughly 20 tonnes in July alone — the largest single-month purchase since 2023.
A weaker dollar amplified the move; gold prices rose about 12% in August.
Gold miners led the index: China Gold International and Zijin Gold International each surged more than 50% in one month, claiming eight of the top ten gainers in the materials index.
In plain terms = central-bank stockpiling plus dollar weakness pushed gold prices from two directions at once, and miners' profits followed.
What signal is copper sending?
Available inventories on the LME — the London Metal Exchange, the main global venue for copper pricing — kept shrinking. The spot premium (how much more buyers pay for immediate delivery versus futures) hit its highest level since 2021.
Jiangxi Copper rose more than 10% within the month.
This reflects a market paying up for physical copper it cannot easily source — supply tightness has moved from the data into the price.
After a 15% rally, are valuations stretched?
The sector's 12-month forward P/E — a valuation based on expected profits over the next year — stands at 9.6×, below the MSCI China Index's 10.5×.
Earnings estimates for materials have been revised up 38% year-to-date, far above the broader market's 4%; consensus expects 54% earnings growth over the next 12 months.
This means → prices have run, but profits have run faster — the sector is actually cheaper than the market. That is exactly what Franklin Templeton's Nicholas Chui meant when he said "this sector has value in its own right."
This is not just a commodity-price-driven trade — there is value in this equity sector itself. Valuations have come down significantly since last year, while earnings growth has remained strong.
Nicholas Chui
Portfolio Manager, Franklin Templeton
What underpins long-term demand?
Hong Hao, CIO of Lianhe Asset Management, argues that copper is clearly undersupplied, especially in the near term.
The build-out of AI data centers and cloud computing is set to increase, not decrease, global demand for copper, silver, rare earths, and other minerals.
In plain terms = the hotter AI gets, the more data centers go up, the more power they draw — and grids and servers all need copper. The tech wave has become a demand engine for old-economy materials.
Can the rally last?
Two things to watch: whether commodity prices can hold at current highs, and whether earnings expectations keep being met.
For now gold has central-bank buying as a floor and copper has inventory drawdowns as support — both legs are still standing.
The risk is equally clear: if the dollar rebounds or commodity prices pull back, the sector's "twin engines" could become twin brakes.
Content is for reference only, not financial advice.