China's three major stock indices closed mixed on March 2. The Shanghai Composite Index rose 0.47%, while the Shenzhen Component Index fell 0.20% and the ChiNext Index declined 0.49%. Combined trading volume across Shanghai, Shenzhen, and Beijing exchanges reached 3.04 trillion yuan, surging by 539.8 billion yuan from the previous session.
Market movements were heavily influenced by geopolitical tensions, with spot gold breaking above $5,400 per ounce. The Nonferrous Metals ETF (159876), which holds leading companies in the sector, climbed significantly during afternoon trading, closing 3.6% higher. Major capital flowed heavily into the defense sector, with the core defense asset—Military ETF Huabao (512810)—rising as much as 3.34% intraday before closing up 2.56%. The General Aviation ETF Huabao (159231) gained 2.52%. Oil and chemical stocks also strengthened, with the Chemical ETF (516020), heavily weighted in petroleum and basic chemicals, finishing 1.95% higher.
Recent escalation in regional conflicts has triggered volatility across global markets. Analysts suggest that unless clear signals of de-escalation emerge in the Middle East, volatility in crude oil, gold, foreign exchange, and global equity markets will likely persist in the coming week. Xiangcai Securities noted that investors should monitor the impact of geopolitical events on various sectors, with beneficiary industries—such as defense, precious metals, fertilizers, and oil and gas—potentially experiencing short-term upside volatility.
Looking ahead, Great Wall Securities indicated that in March, factors including improved policy expectations and favorable domestic and international liquidity conditions should sustain strong risk appetite in A-shares. Trading volume and margin lending balances in the first two months of 2026 have already shown significant increases compared to the fourth quarter of last year and remain at historically high levels. The trend of industrial capital increasing holdings and share buybacks is also expected to continue. Recent recommendations focus on cyclical sectors, technology, and overseas expansion themes—specifically nonferrous metals, chemicals, and shipping within cyclical industries; computing power and certain AI applications in technology; and power grid equipment in the overseas expansion segment.
AVIC Securities added that following the Spring Festival, important policy windows are approaching, potentially accompanied by a visit from the U.S. president, which may signal the start of the second half of the spring market rally. After a mid-session consolidation, A-shares appear healthier, and investors may adopt a more proactive stance toward key meetings this year compared to previous years. Structurally, attention should be directed toward sectors with fundamental validation, such as those benefiting from price increases and upstream demand driven by AI. Additionally, thematic segments with catalysts and policy-related plays may offer short-term trading opportunities.
【ETF Market Review】Focus on trading and fundamental conditions of sector-specific ETFs covering nonferrous metals, defense, and power utilities.
I. Geopolitical Conflicts Ignite Safe-Haven Demand; Spot Gold Tops $5,400! Nonferrous Metals ETF (159876) Surges 3.6% on Heavy Volume; Nine Constituents Including Hunan Gold Hit Limit-Up
Spurred by geopolitical tensions, spot gold surpassed $5,400 per ounce. The Nonferrous Metals ETF (159876), which aggregates leading nonferrous metal companies, advanced in the afternoon session, closing up 3.6%. Daily turnover reached 180 million yuan, a 70% increase from the previous day, with net subscriptions of 17.4 million units.
Nine constituent stocks rose by the daily limit. Among gold leaders, Western Gold, Hunan Gold, Chifeng Gold, and Zhongjin Gold all hit limit-up. In the minor metals segment, Huaxi Nonferrous Metals, Yunnan Tin, and China Rare Earth also reached limit-up. Additionally, silver leader Hunan Silver and copper producer Baiyin Nonferrous rose by the daily limit.
How does escalating geopolitical conflict affect nonferrous metal prices? By segment: 1. Precious Metals: Everbright Securities believes that former U.S. President Trump may shift focus to Cuba and Greenland, indicating continued global geopolitical instability. Structural vulnerabilities in the U.S. dollar credit system will continue to support gold's monetary attributes, coupled with unabated central bank gold purchases, enhancing gold's strategic role as a reserve asset. The long-term bull thesis for gold remains intact. 2. Industrial Metals: China Securities (CSC) pointed out that approximately 7 million tons of aluminum smelting capacity across six Middle Eastern countries—particularly nearly 800,000 tons in Iran—face threats to both raw material inputs and finished product exports. With global aluminum inventories having limited shock absorption capacity, aluminum prices are likely to trend upward. 3. Minor Metals: CSC also noted that escalating Middle East tensions may drive significant demand growth for strategic metals used in weapon replenishment and security stockpiling—such as tungsten, molybdenum, antimony, rhenium, uranium, tantalum, beryllium, titanium, and germanium, which play critical roles in defense applications.
Outlook: Can nonferrous metals continue rising? CITIC Securities maintains that upward momentum remains strong. Supply disruptions, robust demand in certain segments, and stockpiling activities provide solid support for metal prices. Increased trading activity due to loose liquidity and safe-haven demand fueled by geopolitical conflicts may amplify price volatility. The firm sees配置 value in precious metals, industrial metals, battery metals, and strategic metals.
II. Major Shift: Institutional Capital Rapidly Boosts Strategic Assets; Military ETF Huabao (512810) Rises 3.34%, Trading Volume Doubles! Multiple Constituents Hit Limit-Up
Amid heightened geopolitical risks, A-share defense stocks rallied as expected, with major funds aggressively buying. Net inflows into the defense sector exceeded 6.1 billion yuan for the day, ranking third among all Shenwan industries, behind only petroleum and communications.
The core defense asset—Military ETF Huabao (512810)—gapped up at the open, reaching an intraday high of 3.34% before closing up 2.56%. The ETF traded at a premium with heavy volume throughout the session, recording turnover of 113 million yuan—a more than 120% surge from the previous day and the highest in nearly one and a half months—indicating strong buying interest.
Most constituents advanced. AVIC UAS hit a 20% limit-up intraday, closing 19.71% higher. Aerospace Nanhu rose 12.67%, while North Navigation and Aerospace CH rose by the 10% daily limit. Triangle Defense, Tunan Shares, and Yingliu Co. led decliners.
Over the past weekend, sudden intensification of international conflicts rapidly boosted attention on the defense sector. Reports indicate the U.S. has proposed raising the FY2027 defense budget to $1.5 trillion, a 50% increase from 2026. How should investors view defense opportunities in this changing landscape?
Galaxy Securities emphasized that deterrence through strength remains crucial; escalating geopolitical risks will reinforce expectations of steady defense budget growth, with significantly improved certainty in procurement pace and scale. Equipment procurement may continue to favor main battle platforms and new-domain capabilities, with air defense and missile defense, anti-stealth systems, precision-guided weapons, unmanned systems, and defense informatization likely becoming key investment focuses.
Concurrently, China’s defense exports may witness structural expansion opportunities. Chinese defense equipment offers high cost-effectiveness, no political strings attached, full supply chain autonomy, and combat-proven advantages, potentially making it a core alternative for Middle Eastern militaries. Export business for domestic prime contractors could achieve scale breakthroughs, with the proportion of international revenue potentially rising to 10%–15%, representing a 3–4 fold increase from the current average of 3.82%.
【Investing in Defense: Choose the “81” Code】Military ETF Huabao (512810) (formerly Defense ETF) aggregates cutting-edge defense technologies across naval, land, air, and space domains, covering hot themes such as commercial aerospace, large aircraft, low-altitude economy, satellite navigation, defense informatization, and controlled nuclear fusion. As a margin trading and Stock Connect eligible instrument, it offers an efficient tool for gaining exposure to core defense assets.
III. Fuling Power Records Second Consecutive Limit-Up! Power ETF Huabao (159146) Extends Winning Streak to Five Days, Reaching New Highs! Multiple Tailwinds Support Continued Valuation Uplift
The power sector remained active, with individual stocks rallying consecutively. The CSI All Share Power & Utilities Index gained over 1%. Fuling Power secured its second straight limit-up, Guiguan Power hit its first limit-up, while YN Energy, which had seven consecutive limit-ups previously, advanced another 6%. Yongtai Energy and China Yangtze Power rose more than 2%.
Among popular ETFs, the “HALO” core asset—Power ETF Huabao (159146)—closed up 1.43%, hitting a new record, and notched a five-day winning streak. Daily turnover exceeded 67 million yuan, reflecting sustained active trading.
Market analysis points to three strong supports for the power sector: first, the HALO trading theme; second, the power export logic underpinned by token usage data; and third, high dividend yields providing defensive value during market volatility.
On the earnings front, several power companies reported robust profit growth for 2025. According to Wind data, as of February 27, 46 power firms had issued 2025 earnings disclosures. Based on flash reports or forecast midpoints, 24 companies posted net profits exceeding 100 million yuan. China Yangtze Power led with 34.167 billion yuan in net profit; Datang Power, Jingneng Power, Shanghai Electric Power, and Gansu Energy reported profits between 2 billion and 8 billion yuan.
CICC noted that Goldman Sachs’ “HALO strategy” has drawn market attention to the scarcity value of “heavy-asset, low-elimination-rate” assets, bringing utilities back into focus. Meanwhile, OpenRouter weekly data showing leading token consumption by domestic AI models reinforces expectations for growing power demand and indirect exports. With strong dividend attributes as a foundation, sector valuations are strengthening amid multiple tailwinds, offering配置 appeal during periodic market fluctuations and style rotations.
To capture opportunities in power and energy driven by the AI boom, consider Power ETF Huabao (159146). The underlying index focuses on power utilities, spanning thermal, hydro, wind, nuclear, and solar power. The sector combines dividend and growth characteristics, with high concentration among leading power companies. The板块 is poised to benefit from AI computing growth and power reform policies, providing a tool to capture sector development opportunities.
Note 1: Brokerages may charge a commission of up to 0.5% for fund unit subscriptions and redemptions, inclusive of fees levied by exchanges and registration institutions. Fund fee details are available in respective legal documents. Note 2: Wind data shows that as of February 28, 2026, under the Shenwan industry classification, the CSI Sub-Industry Chemical Index has weightings of 71.57% in basic chemicals and 11.7% in petroleum and petrochemicals.
Source: Shanghai and Shenzhen Stock Exchanges, data as of March 2, 2026. Reminder: Recent market volatility may be elevated; short-term performance does not indicate future results. Investors should make rational decisions based on individual capital conditions and risk tolerance, with strict attention to position and risk management.
*Institutional views referenced from: ①Xiangcai Securities strategy commentary dated March 2, 2026; ②Great Wall Securities monthly strategy report dated March 2, 2026; ③AVIC Securities research report dated February 28, 2026; ④Everbright Securities article dated March 2, 2026; ⑤CSC report dated March 2, 2026; ⑥CSC report dated March 1, 2026; ⑦CITIC Securities investment strategy dated February 2, 2026; ⑧Galaxy Securities report dated March 1, 2026; ⑨CICC commentary on HALO strategy and token-driven power export themes.
Risk Disclosure: Nonferrous Metals ETF Huabao tracks the CSI Nonferrous Metals Index, base date December 31, 2013, launched July 13, 2015; Military ETF Huabao tracks the CSI Defense Index, base date December 31, 2004, launched December 26, 2013; General Aviation ETF Huabao tracks the CNI General Aviation Industry Index, base date June 29, 2012, launched December 28, 2012; Chemical ETF tracks the CSI Sub-Industry Chemical Theme Index, base date December 31, 2004, launched April 11, 2012; Power ETF Huabao tracks the CSI All Share Power & Utilities Index, base date December 31, 2004, launched July 15, 2013. Index constituents are adjusted per index methodology; past performance does not indicate future results. Mentioned stocks are for illustrative purposes only and not recommendations. All information is for reference only; investors are responsible for their decisions. Views expressed do not constitute investment advice; no liability is accepted for losses resulting from use of this content. Investors should read fund legal documents to understand risks. Fund historical performance is not indicative of future results. Fund risk ratings are provided by the manager; sales agencies may issue different suitability assessments. Fund investments involve risks. CSRC registration does not guarantee fund value or returns.
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