The AI/Science and Technology Innovation theme saw a relatively clear correction in early July. At the same time, an increasing number of market participants are also considering whether to increase allocations to traditional value/dividend stocks for the second half of 2026.
On July 6, the Huabao Chemical ETF (516020) rose over 3% intraday, with trading volume significantly expanding. This ETF tracks the CSI Segmented Chemical Industry Theme Index. Fund Manager Chen Jianhua pointed out that the index's constituent stocks span a wide range of sub-sectors, from battery materials to fluorochemicals, refining, agrochemicals, and downstream plastics. He stated that the underlying index of the Huabao Chemical ETF (516020) selects leading companies from each sub-sector, giving it strong competitive advantages. Furthermore, during the recent index rebalancing, the quality of companies added to the index was notably higher than those removed. Chen Jianhua further analyzed the index's characteristics, noting that different sub-sectors within the CSI Segmented Chemical Industry Theme Index occupy different positions in the industrial chain and have varying degrees of benefit consistency, which contributes to a generally more moderate trend in the index's performance.
Chen Jianhua expressed confidence in the current improvement of the chemical industry's fundamentals. He indicated that the global chemical industry's fundamentals have been reversing since the beginning of 2025. In 2021, industry capital expenditure turned negative for the first time, and as of the third quarter of 2025, global chemical capital expenditure has continued to decline, suggesting potential easing of supply-side pressure in the future. At the level of Chinese listed companies, the year-on-year growth rate of construction in progress turned negative in Q1 2025 and has continued to fall, indicating a gradual tightening of industry capital expenditure, albeit from a still high base. He also noted that the recent rapid decline in crude oil prices is broadly positive for the chemical industry, as prices in the $60-$80 per barrel range are considered very favorable for the sector.
Recent outlooks from Guojin Securities on the chemical sector are also relatively positive. The firm pointed out that after previous adjustments, valuations for some traditional cyclical chemical products are relatively low, and leading companies have shown solid performance, offering good value. Simultaneously, some products remain in upward pricing trends; if industry structure reshapes, there could be promising individual opportunities, such as in additives. In the new materials segment of the chemical sector, technology still holds long-term growth potential, warranting sustained attention.
Chen Jianhua concurred with this view. Regarding the chemical industry's fundamentals, he believes it currently ranks among the top within traditional cyclical/value sectors. From a market perspective, he suggests it is suitable for investors to actively consider during periods of relative market lows.
Since the "anti-involution" trend, the Huabao Chemical ETF (516020) has attracted significant market attention. Meanwhile, off-exchange investors are also actively participating in the A-share chemical sector through the ETF's feeder funds (Class A: 012537, Class C: 012538).