Market Outlook for 2026: BofA Securities predicts that the "Year of the Fire Horse" will favor electrification and AI power infrastructure in the Chinese basic metals market, with a focus on aluminum, gold, copper, lithium, and cobalt stocks.

Stock Recommendations: The broker recommends buying aluminum stocks and has a positive outlook on gold, copper, lithium, and cobalt, while being neutral on coal and bearish on solar energy and building materials due to weak demand and declining profit margins.

Top Stock Picks: Key stock picks include CHALCO, ZIJIN MINING, CHINAHONGQIAO, SD GOLD, and GANFENGLITHIUM, with varying short selling ratios indicating market sentiment.

Underperforming Stocks: Notable underperformers include TONGWEI, XINYI SOLAR, ANGANG STEEL, and CR BLDG MAT TEC, which are facing significant short selling pressures.

Stock Ratings Overview: Several companies in the mining and energy sectors received updated ratings, with ZIJIN MINING and CMOC rated as "Overweight," while JIANGXI COPPER was upgraded from "Underweight" to "Neutral."

Short Selling Activity: Notable short selling activity was reported for various stocks, including ZIJIN MINING and CHINAHONGQIAO, with short selling ratios indicating significant market interest.

Price Target Adjustments: Price targets for ZIJIN MINING and CMOC were raised, reflecting positive market sentiment, while JIANGXI COPPER's target was also increased, indicating a shift in investor outlook.

Market Performance: The overall market performance showed mixed results, with some stocks like GANFENG LITHIUM and TIANQI LITHIUM experiencing gains, while others like CHALCO and YANKUANG ENERGY faced declines.

JP Morgan's Sector Preference: JP Morgan ranks the basic materials sector for 2026 as Copper/Gold > Aluminum > Lithium > Coal > Steel, anticipating continued outperformance of MSCI China Materials over MSCI China due to supply disruptions and M&As.

JIANGXI COPPER Rating Upgrade: The rating for JIANGXI COPPER was upgraded to Neutral based on a positive outlook for copper, while Chinese policies are seen as key drivers of commodity prices, with milder-than-expected implementation of the "anti-involution" policy.

Steel Sector Challenges: Due to ongoing efforts to reduce excess capacity, steel profit margins are expected to remain low, leading to downgrades for BAO IRON to Neutral and ANGANG STEEL to Underweight.

Morgan Stanley's Top Picks: ZIJIN MINING is highlighted as Morgan Stanley's top pick for the year, with continued favor for CMOC, CHALCO, and CHINAHONGQIAO amidst significant short selling activity in these stocks.

Citi Research Update: Citi Research has updated its model for CHALCO (02600.HK) to reflect new forecasts for aluminum and alumina prices, raising net profit forecasts for 2025-2027 by 2%, 4%, and 7%.

Target Price Increase: The target price for CHALCO's H-shares has been increased from $12.41 to $15.94, indicating a positive outlook for the company's stock.

Market Position: Citi Research expects CHALCO to benefit from the rising aluminum prices and margins, maintaining the stock as a Top Pick.

Short Selling Data: As of January 7, 2026, CHALCO has a short selling amount of $169.14 million, with a ratio of 16.038%.

LME Futures Performance: LME aluminum futures rose by 2.3% to $3,085.5 per ton, while LME copper futures increased by 4.2% to $12,991.5 per ton.

Market Activity in Precious Metals: CHINAHONGQIAO saw a significant rise of 6.4% to $35.32, with a turnover of $1.541 billion, while other companies like CHALCO and JIANGXI COPPER also experienced notable gains.

Geopolitical Impact on Commodities: CLSA reported that Venezuela's situation is raising geopolitical risks, which supports gold prices and intensifies oil oversupply.

Future Trends in Aluminum and Copper: Analysts predict a moderate rise in aluminum prices and a shift towards aluminum in sectors like air conditioning due to rising copper prices, while domestic aluminum companies are expected to see declining capital expenditures but expanding profits.