(Bloomberg) --
Chinese rare earth stocks surged in May amid bets increased tensions with the U.S. will spur the Beijing to limit exports of the crucial metals.
The sector saw double-digit jumps, led by China Minmetals Rare Earth Co. at 27% and JL Mag Rare-Earth Co. at 24%. Rare earth elements also rallied, with dysprosium oxide jumping almost 10% in barely a week to its highest since August while terbium oxide climbed 7.7%, according to commodities market information provider Shanghai SteelHome E-Commerce Co.
Such bets may be short-lived. A similar rally in May 2019, also triggered by rising tensions, unraveled when China didn't enact export controls on rare earths and a phase one trade deal was signed. China produces about 70% of the world's mined rare earths, which are used in products from electric vehicles to military hardware.
Shares pulled back Monday because U.S. President Donald Trump's response to Chinese action on Hong Kong may provide room to de-escalate tensions. Minmetals Rare Earth and JL Mag both at least 2% while the Shanghai Composite Index rose 2% and Hong Kong equities climbed even more.
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