Main force invests 4.3 billion into chemicals, Huabao Fund Chemical ETF (516020) rises 2.56%! Institutions: A new inventory cycle has started, is the turning point approaching?

The chemical sector continued its rebound today (March 25)! Reflecting the overall trend of the chemical sector, the Huabao Chemical ETF (516020) surged quickly after opening, with intraday prices reaching a maximum increase of 2.56%, and then remaining volatile at high levels. By the close, it was up 1.67%.

In terms of constituent stocks, some stocks in the petrochemical, phosphorus chemical, and lithium battery sectors led the gains. By the end of the day, Hengli Petrochemical, Hengyi Petrochemical, and Oriental Shenghong soared over 5%, while Zhejiang Longsheng, Rongsheng Petrochemical, and Nanjing Zhongbang rose over 4%.

It is worth noting that despite a significant correction in the market over the past two weeks, the chemical sector has still achieved positive returns this year. Data shows that as of today’s close, the target index of the Huabao Chemical ETF (516020) has a year-to-date cumulative increase of 4.74%, significantly outperforming the Shanghai Composite Index (-0.93%), CSI 300 Index (-2%), and other major A-share indices.

Data source: Wind, covering the period from January 1, 2026, to March 25, 2026. The annualized gains and losses of the segmented chemical indices over the past five full years are: 2021, +15.72%; 2022, -26.89%; 2023, -23.17%; 2024, -3.83%; 2025, +41.09%. The composition of index constituents is adjusted periodically according to the index rules, and backtested historical performance does not predict future performance.

From a capital flow perspective, the chemical sector continued to attract major funds today. Wind data shows that by the close, the basic chemical sector saw a net inflow of 4.37B yuan from main funds, ranking 5th among 30 first-level CITIC industries.

CITIC Securities states that overall, the supply-demand pattern is highly likely to reverse in the two years following the cumulative negative capital expenditure in the chemical industry by June 2025. Different varieties will start at different times based on their specific supply-demand balances. However, with the rise in oil prices at cycle lows leading to price increases and inventory depletion, upstream supply will contract while downstream replenishment is accelerated. The point at which PPI turns positive is likely to come earlier, and a new inventory cycle is beginning. Varieties that are more sensitive to supply structure shortages caused by geopolitical disturbances, such as ethylene, propylene, aromatics, and butadiene, are particularly noteworthy.

Looking ahead, Kaiyuan Securities points out that the chemical industry’s capacity deployment cycle has basically ended, and top-level authorities have clearly emphasized deepening the rectification of “involutionary” competition. The turning point of the chemical industry’s prosperity is gradually becoming clearer. After this round of adjustments, most leading chemical companies have entered a deep value zone, and the industry’s prosperity cycle may accelerate.

How to seize opportunities in the chemical sector? Investing through the Huabao Chemical ETF (516020) may offer higher efficiency. Public information shows that this ETF tracks the CSI Sub-segment Chemical Industry Theme Index, with oil & petrochemical and basic chemical sectors accounting for over 80% of the total weight. Off-market investors can also gain exposure via the Huabao Chemical ETF Connect Fund (Class A 012537 / Class C 012538).

Source: Shanghai and Shenzhen Stock Exchanges, as of March 25, 2026.

Note: When investors subscribe or redeem fund shares, the authorized broker may charge a commission not exceeding 0.5%, including related fees from stock exchanges and registries. The chemical ETF does not charge sales service fees.

The subscription fee for the Chemical ETF Connect A shares is: under 1 million yuan, 1%; between 1 million (inclusive) and 2 million yuan, 0.6%; above 2 million yuan, a flat 1,000 yuan per transaction. Redemption fees are: within 7 days, 1.5%; between 7 days (inclusive) and 180 days, 0.5%; beyond 180 days, 0%.

The redemption fee for the Chemical ETF Connect C shares is: within 7 days, 1.5%; beyond 7 days, 0%. The sales service fee rate is 0.2%.

Note: Wind data shows that, according to Shenwan’s first-level industry classification, as of February 27, 2026, the weights of basic chemical and petrochemical industries in the CSI Sub-segment Chemical Index are 71.57% and 11.7%, respectively.

Institutional views: ① CITIC Securities’ March 15, 2026, research report on basic chemicals “Chemical Price Surge Continues, Spread Index Rises Significantly”; ② Kaiyuan Securities’ March 22, 2026, weekly report “Chemical Industry Enters the Hitting Zone, Fully Optimistic About the Bull Market.”

Risk warning: The Huabao Chemical ETF tracks the CSI Sub-segment Chemical Industry Theme Index, which was launched on December 31, 2004, and published on April 11, 2012. The index constituents are adjusted periodically according to the index rules, and backtested historical performance does not predict future results. The stocks mentioned are only listed for objective reference and do not constitute recommendations or endorsements by the fund manager or investment direction. All information (including but not limited to stocks, comments, forecasts, charts, indicators, theories, or any other forms) in this article is for reference only. Investors are responsible for their own investment decisions. The views, analysis, and forecasts in this article do not constitute investment advice and do not hold the author or publisher liable for any direct or indirect losses caused by using this content. Investors should carefully read the fund’s legal documents such as the “Fund Contract,” “Prospectus,” and “Fund Product Information Summary” to understand the fund’s risk-return characteristics and choose products suitable for their risk tolerance. Past performance does not predict future results, and the performance of other funds managed by the fund manager does not guarantee the performance of this fund. According to the fund manager’s assessment, the risk level of the Huabao Chemical ETF is R3 – medium risk, suitable for balanced (C3) and above investors. Suitability opinions are subject to the sales institutions’ judgment. Sales institutions (including the fund manager’s direct sales channels and other sales agencies) are required to evaluate the risk according to relevant laws and regulations. Investors should pay attention to the suitability opinions issued by the fund manager, which may vary among sales channels. The risk level assessment results issued by sales agencies should not be lower than those by the fund manager. The fund contract may differ in describing the fund’s risk-return features and risk level due to different considerations. Investors should understand the fund’s risk-return profile, consider their own investment objectives, time horizon, experience, and risk capacity, and make cautious choices. The China Securities Regulatory Commission’s registration of the fund does not imply any judgment or guarantee of its investment value, market prospects, or returns. Investment in funds should be cautious.