Hong Kong metals stocks surge 10% as commodity prices rebound

Hong Kong-listed non-ferrous metals stocks staged a sharp afternoon rebound, with Aluminum Corporation of China leading gains as rising commodity prices and expectations of Chinese economic stimulus reignited demand for the sector.

Aluminum Corporation of China (2600.HK) surged as much as 10% in afternoon trading on Tuesday, while China Hongqiao Group (1378.HK) and Jiangxi Copper Co. (0358.HK) each climbed more than 7%, according to exchange data. The coordinated rally marked a reversal from recent weakness in the materials sector, which had lagged broader Hong Kong markets through the first half of 2026.

"The move is being driven by a combination of firmer aluminum and copper prices on the London Metal Exchange and growing expectations that Beijing will roll out more aggressive stimulus measures to support domestic demand," said a Hong Kong-based metals trader who asked not to be named discussing client flows. China's retail sales turned negative in May for the first time in years, raising pressure on policymakers to act.

Aluminum prices have found support from supply tightness, with Vedanta Aluminium reporting its highest-ever quarterly production of 632,000 metric tons in the April-to-June period, while brokerages including Nuvama and Motilal Oswal have turned bullish on the outlook for the metal through fiscal 2028. Copper prices have also firmed as inventories on the Shanghai Futures Exchange declined.

The rally in metals stocks comes as the broader Hang Seng Index struggled for direction, with traders weighing the impact of a newly hawkish Federal Reserve against the potential for fresh Chinese stimulus. The Fed signaled a possible rate increase at its June meeting, while the People's Bank of China has kept its easing measures incremental, with banks passing little of the central bank's rate cuts through to borrowers.

For the metals sector, the key question is whether the rebound reflects a durable improvement in end-market demand or a short-term positioning squeeze. China's property downturn continues to weigh on construction-related metals consumption, and the government's shift toward prioritizing domestic consumption over export-led growth has yet to translate into meaningful stimulus for the housing sector. The next catalyst for the sector will be China's July Politburo meeting, where policymakers are expected to outline additional support measures for the economy.

This article is for informational purposes only and does not constitute investment advice.