In early trading on June 17, the three major A-share indexes collectively weakened, the Shanghai Composite Index turned green, and the ChiNext Index was not immune.
However, there is one sector that has resisted the pressure and emerged from the three consecutive positives – the building materials sector.
Cathay Building Materials ETF (159745), which tracks the sector, rose nearly 1% in early trading.
In a volatile market environment, where does this confidence of “I’m going to raise my money” come from?
In the final analysis, it is three forces that exerted force at the same time, pushing the building materials sector to the forefront.
The first driving force for the strength of the building materials sector against the trend is the “super big order” from the policy side.
In May this year, the State Council officially issued the “15th Five-Year Plan for Urban Renewal”, which clarified that the scale of relevant investment in the next five years will not be less than 15 trillion yuan.
How will this money be spent?
The plan gives hard targets: to complete the renovation of 500,000 dilapidated urban housing units, 365,000 kilometers of urban underground pipe networks, and repair 1,500 factories in old neighborhoods within five years.
Behind these projects, the demand for traditional building materials such as waterproofing materials, insulation materials, and plastic pipes is almost obvious.
More importantly, the policy also promotes the mandatory popularization of “green building materials”.
The Ministry of Housing and Urban-Rural Development made it clear at the State Council Information Office briefing that all urban renewal projects should give priority to new green building materials with high performance and low energy consumption.
This directly boosted orders in segments such as environmentally friendly coatings and energy-saving doors and windows.
In the first quarter, my country’s green building materials revenue reached 61 billion yuan, a year-on-year increase of 12%, and the annual target is aimed at 300 billion yuan.
For investors, urban renewal is not a short-term hype, but a long-term logic that can last five years.
The confidence of the building materials sector is also inseparable from the marginal improvement of the real estate industry.
According to data from the National Bureau of Statistics, from January to May this year, although the completed area of housing nationwide still fell by 23.4% year-on-year, the decline narrowed by 0.6 percentage points compared with the previous four months.
Don’t underestimate this 0.6 percentage point. Behind this is the continued implementation of the “Guaranteed Delivery of Buildings” policy. The resumption of construction and delivery of suspended projects has accelerated the pace of completion.
Once the completion end is improved, the direct benefit will be the back-end decoration and building materials – waterproofing, coatings, ceramic tiles and other categories have begun to have stable shipments.
Another signal comes from the performance of consumer building materials companies.
Huatai Securities research report data shows that the revenue of the consumer building materials sector in the first quarter of 2026 increased by 7% year-on-year, and the net profit attributable to the parent company increased by 41.1%.
This shows that even if the overall real estate investment is still declining, the delivery and repair of existing projects are enough to make the profitability of leading companies “turn around” first.
If urban renewal and real estate restoration are “old money”, then the transmission of the AI industry chain to the upstream is the most surprising “new money” in the building materials sector in the near future.
The core clue of this wave of market conditions is that the demand for AI servers has exploded, which has driven upstream electronic materials—especially electronic fabrics—to skyrocket in price.
Electronic cloth is a key substrate for manufacturing PCB (printed circuit board), and AI servers require more than 10 times the demand for PCBs than traditional servers.
Due to the surge in demand, the price of electronic cloth continues to rise.
According to data from Zhuochuang Information, by early June this year, electronic fabrics with mainstream specifications in the market had completed the fifth round of price increases during the year, with the average price rising to 7.4 yuan/meter, an increase of 100% from the low in the third quarter of 2025.
The effect of price doubling is directly reflected in corporate profits.
The leading stock International Composites’ first-quarter net profit attributable to parent companies soared 412.94% year-on-year, with a cumulative increase of about 25% in the past three trading days.
The cumulative gains of related stocks such as Kibing Group and NorthGlass also exceeded 10%.
These increases send a clear signal: the growth in demand brought about by AI has been transmitted from chip computing power to the basic materials for “building a house”.
The logic of this three-level driver is finally reflected in the Cathay Building Materials ETF.
This ETF heavily positions conch cement, Dongfang Yuhong, Beijing New Construction Building Materials and other leading brands, covering the entire chain of traditional building materials, green building materials and AI-related materials.
As of June 15, the size of Cathay Building Materials ETF reached 849 million yuan, with its share increasing by 56.57% this year.
During the sector’s three consecutive positive days, the ETF’s daily trading volume also remained in the tens of millions, with ample liquidity.
For investors who are optimistic about the market situation of the building materials sector, ETFs provide a convenient tool to package leaders and diversify the risks of individual stocks with one click.
However, the differentiation of sectors is also worth noting.
The growth rate of AI-related building materials (electronic cloth, special cement) far exceeds that of traditional cement and glass. This reminds us that the future building materials market may no longer be a “flood flood”, but a structural and selective increase.
The core variables worthy of attention in the next stage will be whether electronic cloth prices can stabilize at a high level, whether the pace of issuance of special bonds for urban renewal is accelerated, and further turning points in real estate completion data.
