Non-ferrous "fire", gold leads, how to invest in the market outlook?

The interface has Lianyun

2024-04-08 11:53Published in Shanghai

Since the beginning of this year, the concept of A-share commodities has been dancing in the wind, with the gold sector rising 23%, non-ferrous metals rising 18%, petroleum, petrochemicals, and coal rising 14%.

The holiday sector continues to be positive, gold prices hit new highs, the United States' top economist, Rosenberg Research President David Rosenberg believes that the rally in gold is not over, predicting that the price of gold will rise to $3,000.

Judging from the current macro environment and liquidity, upstream cyclicals are ushering in a better investment cycle.

In 2024, the industrial cycle of China and the United States will bottom out simultaneously, and upstream resources will usher in good fundamental support. Since the beginning of reindustrialization in the United States, the manufacturing industry has continued to strengthen. The preliminary S&P Global manufacturing PMI in March was 52.5, beating expectations of 51.8, and the output sub-component was as high as 54.9. From the perspective of the inventory cycle, as of January, the U.S. inventory cycle is nearing the end, and in recent months, it has shown a bottoming trend, and a new round of comprehensive replenishment has not started. The domestic industrial boom has also been actively recovering. From January to February, the added value of industrial enterprises above designated size increased by 7.0% year-on-year, and after excluding seasonal factors, the industrial growth in January and February continued the recovery trend since June 2023. Moreover, compared with 2022 and 2023, there will be a certain increase in fiscal activity in 2024. In this context, the price cycle of copper, aluminum and other metals is upward.

In terms of oil and gas resources, while the global industrial strength drives demand, due to the lack of global oil and gas capital expenditure, the supply side of crude oil is tight, OPEC regains global pricing power, and regional problems are frequent, and oil prices continue to be high.

The liquidity margin is also improving. At the March FOMC meeting, growth and inflation expectations were raised, but the dot plot pointed to three rate cuts this year, and the overall speech was dovish. The Fed's expectation of interest rate cuts has also opened up room for domestic monetary easing.

Bosera Fund has a relatively complete layout in terms of upstream cyclical products, including gold ETF fund (159937.SZ), Bosera gold ETF connection (A share: 002610, C share: 002611), Bosera Natural Resources ETF (510410.SH), Bosera Natural Resources ETF Connect (A Share: 050024.OF, C Share: 019910.OF), Bosera CSI Nonferrous Metals Mining Theme Index (A Share: 018132.OF, C Share: 018133.OF).

1. Gold

Bosera Gold ETF is a gold spot contract that invests in gold exchanges, and strives to provide investors with investment returns close to the performance of gold prices under the premise of minimizing tracking difference and tracking error, which has many advantages:

Bosera Fund pointed out that gold has three major investment attributes, namely commodity attributes, financial attributes and hedging attributes, and the current pricing is mainly determined by its financial attributes and hedging attributes. First of all, from the perspective of financial attributes, since last year, the market's expectations for the Fed's interest rate cut in '24 and the decline in U.S. Treasury yields have begun to rise, and gold prices have been rising. Judging from the Fed's interest rate meeting on March 21, the overall tone is also dovish, so the market's interest rate cut expectations have risen slightly again after the meeting. In addition, global central banks are more willing to buy gold as a safe asset alternative to US dollar credit. Second, a number of regional events are still ongoing, and the regional game in the Middle East may have an unpredictable impact on the global supply chain and inflation. Against the backdrop of intensifying global regional games, investors have further boosted gold prices based on safe-haven demand. In addition, in 2024, election activities in as many as 40 economies around the world have greatly strengthened the possibility of regional game escalation, and gold assets are expected to continue their upward trend.

2. Bosera Natural Resources ETF and feeder fund

According to the split, the SSE Natural Resources Index (SSE Resources, 000068. SH) is mainly distributed in non-ferrous metals, coal, petroleum and petrochemical industries.

Chart: Sector distribution of SSE Resources Index

Deadline: April 3, 2024

Bosera Fund believes that the overall investment opportunities in copper, gold, aluminum and other metals in the non-ferrous sector are better. Gold prices continued to rise after the Fed's interest rate meeting on March 21 was dovish, and market expectations of interest rate cuts heated up again. Copper not only benefits from the Fed's interest rate cut expectations, the supply and demand pattern is in short supply and demand for a long time, and short-term inventories are at a relatively low level, but also the resilience of the U.S. economy and domestic policies to stabilize growth provide support for copper prices. In terms of aluminum, the long-term supply is constrained, and it is expected that the growth rate of real estate completions will decline to weaken the support for aluminum demand, but the demand for new energy such as automobiles and photovoltaics is improving, and the domestic "steady growth" policy and overseas interest rate cuts have brought upward expectations. Coal prices are under pressure in the short term, but with the rise in electricity demand in the second quarter, it is expected to drive coal prices upward, and coal stocks have a high dividend logic, and the short-term correction will gradually usher in allocation opportunities. Crude oil prices have been rising since the beginning of the year, and ICE Brent crude oil has recently broken through $88 per poke due to factors such as good U.S. economic data and rising risks in the Middle East.

Related products: Bosera Natural Resources ETF (510410.SH), Bosera Natural Resources ETF Connect A (050024.OF), Bosera Natural Resources ETF Connect C (019910.OF).

3. Non-ferrous mining

In terms of industry distribution, the CSI Nonferrous Metals Mining Theme Index (referred to as Nonferrous Mining, code 931892) mainly involves copper, lithium, gold, aluminum and other metal categories.

Chart: Distribution of non-ferrous mining index by industry

Deadline: April 3, 2024

Gold pricing is affected by multiple dimensions, and the current impact is on the real interest rate of US Treasury bonds and the increase in reserves by global central banks. Since last year, the market's expectations for a Fed rate cut in '24 have begun to rise, and gold prices have been rising. Judging from the Fed's interest rate meeting on March 21, the overall tone is also dovish, so the market's interest rate cut expectations have risen slightly again after the meeting. In addition, as a safe asset alternative based on US dollar credit, gold has increased the willingness of global central banks to buy gold amid the intensification of risk conflicts in the global regional situation, which has raised the center of gold's medium and long-term prices.

Copper is in short supply in the medium to long term. In recent years, the operating costs of the world's major copper companies have risen significantly, on the one hand, the hidden costs under the global ESG trend are rapidly increasing, and on the other hand, the taste of copper mines is irreversibly declining. In the short term, the 24-year supply-demand balance outlook for copper is tight, inventories remain relatively low, and the resilience of U.S. economic data, coupled with the upward industrial cycle in China and the United States, all provide support for prices. In addition, the Fed's interest rate cut in Q2 is expected to be positive for copper prices.

In terms of aluminum, due to the long-term supply constraints of production and energy policies, as of November 20, 23, the domestic social inventory of electrolytic aluminum was only 662,000 tons. It is expected that the growth rate of real estate completions will decline in 24 years, and the support for aluminum demand will be weakened, but the demand for new energy such as automobiles and photovoltaics will improve, and the domestic "steady growth" policy and overseas interest rate cuts will bring upward expectations.

The above content and data have nothing to do with the position of the interface and do not constitute investment advice. Do so at your own risk.

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