"Big Banks" Bank of America Securities: "Year of the Red Horse" Preferred Aluminum Stocks, Pessimistic on Construction and Solar Materials, Top Stock Picks are Chalco, Zijin Mining, CHINAHONGQIAO, SD GOLD, and Ganfeng Lithium

Bank of America Securities published a research report, indicating that 2026 is the "Year of the Red Horse." For the Chinese base metals market, this year is favorable for electrification and AI power infrastructure, mainly due to the following key factors: a weak US dollar and the US interest rate cut cycle benefiting metals; continued tight supply of copper and aluminum; demand drivers this year include grid investment (up 10% year-on-year), electrification (electric vehicle battery growth of 27%), energy storage systems (growth of 41%), and AI power demand; weak real estate (down double digits year-on-year) and consumption; anti-involution policies becoming more balanced, but recent enforcement has been weak.

Regarding related stock recommendations, Bank of America Securities prefers aluminum stocks (as an alternative investment for AI power supply, predicting a price-to-earnings ratio between 8 to 10 times) and holds a "buy" view on gold, copper, lithium (including battery materials), and cobalt stocks; it has a neutral outlook on coal; and is bearish on solar energy and building materials (such as steel), mainly due to weak demand, short-term weak enforcement of anti-involution policies, and declining steel profit margins.

The bank's preferred stocks include Aluminum Corporation of China (02600.HK), Zijin Mining (02899.HK), CHINAHONGQIAO (01378.HK), SD GOLD (01787.HK), and Ganfeng Lithium (01772.HK).

Bank of America Securities stated that key underperforming stocks include Tongwei Co., Ltd. (600438.SH), Xinyi Solar (00968.HK), Ansteel (00347.HK), and China Resources Cement Technology (01313.HK). Detailed ratings and target prices for these stocks can be found in another table