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2026-10-09 14:58:08 JPM released a research report stating that it remains constructive on China's basic materials sector through year-end, as fundamentals remain resilient despite weak market expectations. The broker noted that the sector has still delivered a positive return of about 4% so far in 3Q26, but lagged the MSCI China Index, which rose about 8%, with sentiment weighed down by uncertainty surrounding the Federal Reserve, de-risking, and concerns over weaker supply-demand dynamics in 2027. The broker expects the sector outlook to gain further support from ongoing supply constraints or disruptions, easing concerns over interest rate hikes, and continued policy focus on production capacity discipline. The broker prefers copper, as earnings visibility and supply tightness are clearer than in other sub-sectors. ZIJIN MINING (02899.HK) is its top pick in the copper and gold mining sector. The stock is currently valued at about 8x projected 2027 P/E, compared with the five-year average of about 11x. The rating is maintained at Overweight with a TP of HKD50. For gold, the broker maintained its Overweight rating on ZIJIN GOLD INTL (02259.HK), but downgraded SD GOLD (01787.HK) from Neutral to Underweight due to a substantial cut in production guidance caused by regional safety inspections, with the impact expected to continue through 2027. Coal remains a tactical opportunity amid persistently high coal prices. The broker expects QoQ earnings growth in 3Q26 to be led by coal, followed by copper. Aluminum profit may weaken slightly, while lithium earnings are expected to decline due to falling lithium carbonate and spodumene prices. Steel is expected to remain at the bottom of the broker's coverage universe. The broker's sector preference ranking is copper > gold > coal (tactical) > lithium > aluminum > steel. JPM raised the TP for ZIJIN GOLD INTL (02259.HK) from HKD146 to HKD165 and maintained the Overweight rating; lowered the TP for SD GOLD (01787.HK) from HKD25 to HKD15; maintained the Overweight rating on JIANGXI COPPER (00358.HK) with a TP of HKD44; maintained the Overweight rating on GANFENGLITHIUM (01772.HK) while sharply cutting the TP from HKD70 to HKD40; and maintained the Neutral rating on TIANQI LITHIUM (09696.HK) while lowering the TP from HKD36 to HKD25. Detailed ratings and target prices are provided in a separate table. (da/u)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |