Bank of America loudly proclaims China's stock market as a "metal bull"! Aluminum sector's top pick: China Hongqiao (01378), target price raised to $48

CNBC Finance APP has learned that Wall Street financial giant Bank of America recently released a research report stating that in an environment of rising market volatility, it maintains a strong bullish stance on Chinese metal stocks such as gold, copper, aluminum, and lithium, with a core logic based on “tighter supply + structural demand driven by the electrification/AI wave,” especially as the copper and aluminum markets are expected to face severe supply deficits. Therefore, even with short-term fluctuations, the overall trend remains unchanged.

On the equity side, the Chinese stock market’s metal sector is explicitly recommended, with a top stock list including Zijin Mining, Zijin Gold, China Aluminum (Chalco), China Hongqiao (01378), and Huayou Cobalt.

Bank of America is generally very optimistic about the structural opportunities in China’s metal sector. The core logic focuses on “demand resilience from electrification/AI infrastructure + supply constraints/capacity bottlenecks pushing profit centers higher,” thus favoring leading metal and resource stocks during periods of increased volatility.

The bank’s strategists state that the key investment thesis for gold remains “the bull market is still supported”: expectations of a weaker dollar, policy/geopolitical uncertainties driving “strategic reserve” demand, and structural support from ETF and strong central bank purchases all reinforce their view that the path to $6,000 per ounce remains unchanged, with the gold price center still around $4,900–$5,000 per ounce in 2026–27.

Bank of America believes that the copper market is partly “commodity-driven.” They estimate a global copper supply gap of about 500,000 to 600,000 tons in 2026/27, emphasizing that demand is driven by “Electrification”—strong expansion in power grids, EVs, energy storage (ESS), and AI infrastructure. For the Chinese market, they expect copper demand to grow by approximately +2.5% in 2026, with potential government “stockpiling/reserve” activities acting as a strong catalyst.

Bank of America is most optimistic about the profitability resilience of China’s aluminum sector. They project aluminum prices in China to be anchored at RMB 23,000 per ton in 2026 and believe industry profits could reach historically high levels of RMB 6,000–7,000 per ton. The bullish case for aluminum is driven by five factors: (1) China’s capacity approaching a ceiling of about 45 million tons; (2) Indonesia’s expansion constrained by electricity and other factors, with slow overseas supply ramp-up; (3) demand resilience from AI data centers, power grids, energy storage, and EVs; (4) a copper-to-aluminum price ratio exceeding 4x, encouraging material substitution; (5) additional loads for powering large AI inference systems combined with China’s cost advantage in electricity.

Regarding specific stock allocations, Bank of America’s strategists explicitly list Chalco and China Hongqiao as top picks in the aluminum sector, raising their 2026 earnings forecasts. They also provide valuation anchors: Chalco at approximately 10x 2026E P/E with about a 5% dividend yield; China Hongqiao at around 9x 2026E P/E with about a 7% dividend yield. The target price for China Hongqiao is raised to HKD 48 (from HKD 45), reflecting confidence in aluminum prices remaining firm under their revised outlook, and highlighting the company’s unmatched vertical integration, which places it in the lowest quartile of global cost curves long-term, along with high structural dividends (over 60%, with a 7% dividend yield in 2026) and stock buybacks.