In recent weeks, the global gold market has witnessed a notable surge, prompting concerns that the more it rises, the more apprehensive investors becomeThe unprecedented climb in gold prices has been attributed not only to market dynamics but also to various economic indicators that have created a profound impact on trading behaviors across multiple sectors, particularly in the metals market.

As we approached the Qingming Festival, the final trading day leading into this holiday saw gold prices soar, inspiring a strong rally not just in gold stocks but across other precious metals and various commoditiesStocks associated with metals have been significant beneficiaries of this bullish sentiment, with many hitting new records and marking a significant rebound in value, filling the gaps left by the fluctuating fortunes of tech stocks influenced by AI trends.

On April 3rd, the non-ferrous metals sector experienced a robust rebound, increasing approximately 3% on the day, while gold-related stocks saw an even greater surge of over 4%. This upward trajectory was somewhat predictable in the wake of the market's bifurcation that began in late March; the non-ferrous metals have been among the few sectors to continue climbing in value during this market shift.

Taking a step back to evaluate the situation, since the market rebound initiated on February 6, the non-ferrous metal segment has cumulatively risen by more than 40%. Within this context, precious metals like gold mirrored this trend, also boasting gains exceeding 40%. This impressive rally has set the sector apart from other more stagnant areas of the market as investors have flocked to capitalize on rising prices and favorable economic forecasts.

The performance of individual stocks within this group is equally striking, with many reaching new historical highs and yielding substantial excess returns in the short term

Analysis indicates that since February 6, over 130 stocks in the Shenwan universe have all experienced price increases, with nearly 40 climbing over 50% in valueNumerous firms have recently set records in their stock prices amid the growing enthusiasm.

The rationale behind the rebound in non-ferrous metals has become quite evidentThe prevailing positive market sentiment driven by various macroeconomic factors has significantly impacted this segmentAnalysts point to several key contributors, among which the expectations surrounding Federal Reserve interest rate cuts stand out prominently.

Firstly, the anticipation of a rate cut by the Federal Reserve is bolstering international gold prices, instigating a ripple effect across gold-related sectors

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Historically, gold prices exhibit strong correlations with numerous indices, including interest rates, currency exchange rates, and commodity prices, which means a cut in rates tends to favorively impact dollar-denominated precious metals.

Currently, gold prices are pushing towards record highs with futures contracts reflecting a substantial rise, climbing to approximately 540 RMB per gram, marking a peak not seen beforeSince January, there's been a cumulative rise of over 10%, indicating an explosive upward trend in investor interest in gold assets.

The crucial question remains: will this bullish trend in gold persist? Many institutions express cautious optimism, suggesting that the likelihood of a June interest rate cut elevated by the Federal Reserve could consolidate gold's upward trajectory further

In contrast, some analysts from different firms propose that the backdrop of de-globalization is also a powerful support for precious metals to reach new heights.

Secondly, an increase in overall economic data plays an essential role in the rising prices of non-ferrous metalsFor instance, China's PMI for March rebounded to 50.8, exceeding the critical threshold, suggesting a rejuvenation in the manufacturing sector which will likely augment the demand for industrial metals such as copper, aluminum, lead, zinc, and nickelRecently, prices for these metals have also shown a positive trend.

Moreover, factors such as annual report catalysts and heightened risk aversion can also contribute significantly to the growth in the non-ferrous metals sector

As volatility persists in the broader markets, more investors are likely to turn towards these relatively stable commodities as a hedge against potential economic downturns.

Characteristics of Leading Non-Ferrous Metal Stocks: Top Tier, High Earnings Elasticity, and Undervalued Metrics

In light of the prevailing market sentiment and following a wave of rapid price increases, several stocks within the non-ferrous metals sector are now showing signs of technical overbuyingA number of companies have rallied on limited fundamentals, with concerns about unsustainable performance levels compounded by inflated valuation metricsEngaging with such stocks at this juncture may involve a heightened risk of price consolidation or sharp corrections, should enthusiasm wane.

The non-ferrous metals are closely entwined with the national economy and represent traditional heavy asset industries characterized by significant homogeneous operations

These sectors usually depend heavily on cost and scale advantagesHow, then, does one filter for stocks with superior growth potential and sustainable upward movement?

Our observations reveal that the strongest performers with explosive characteristics display common traits:

1. Leading companies within the industry that demonstrate scale advantages.

2. Those that exhibit relatively high earnings elasticity.

3. Stocks identified as being relatively undervalued with scope for expansion.

For example, consider Zijin Mining, recognized for its scale advantages, whose stock price reached an all-time high since its listing in April 2008, increasing over 40% since February 6. This increase comes as the company reported robust production figures, particularly in copper, which reached around 1.01 million tons, maintaining its competitive edge in the industry.

Another strong performer with significant earnings elasticity is Chifeng Jilong Gold, whose stock saw a dramatic “10 cm” limit-up on March 29, accumulating over a 50% increase since February 6, aided by a reported net profit surge of 78.21% year-on-year, closely tied to the rising gold prices

Chifeng Gold has indicated plans to streamline operations further while capitalizing on favorable gold prices to enhance production.

Companies like Tongling Nonferrous Metals, which is currently valued at approximately 15 times earnings, have also seen stock gains nearing 40% since February 6, further underscoring the potential for growth in this sector.

Regarding non-ferrous metal stocks, brokerage firms have shown selective but keen interestLast week, several prominent brokers highlighted specific stocks, suggesting they possess substantial upside potential based on recent performance analytics and forecasted valuations.

For example, one gold stock with a market capitalization of around 50 billion RMB reached all-time highs on April 3, drawing attention from up to ten brokerage firms, including Caixin Securities and Zhejiang Merchants Securities

The focus is primarily on the company’s abundant gold resources and cost advantages, with HUAFU SECURITIES CO.LTD setting a target price that suggests a 15.24% potential increase over its latest closing price.

Another state-owned non-ferrous company has attracted nine brokerages' attention, with an eye on the company's substantial capacity and future incrementObserving the secondary market, the stock has rebounded significantly since January and has maintained stability above the ten-day and twenty-day moving averages, reflecting a nearly 50% uptrend since the beginning of the yearHUAFU SECURITIES CO.LTD has set a target price that implies significant upside potential.

Additionally, several non-ferrous metal stocks have been particularly highlighted by institutions with target prices indicating a substantial potential for growth, some exceeding 50% as indicated in recent studies.

(The stocks mentioned in this article are examples provided for analytical purposes and are not recommendations for buying or selling.)