The "periodic table" market is coming, and the performance of non-ferrous metal theme funds is rising

Our reporters Gu Mengxuan and Xia Xin report from Guangzhou and Beijing

Non-ferrous metals have recently entered a state of "hurricane". Wind data shows that as of April 19, the CITIC non-ferrous metals industry index has risen 18.71% since the beginning of the year, and has risen as much as 26% in the last three months.

Affected by the strength of the non-ferrous metal sector, the performance of non-ferrous metal ETFs has also risen accordingly this year. According to Wind data, as of April 19, all 22 non-ferrous metal ETFs have achieved positive returns this year. Among them, the performance of gold ETFs is eye-catching: ChinaAMC CSI CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock ETF, Yongying CSI CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock ETF, and ChinaAMC CSI Subdivision Non-ferrous Metals Industry Theme ETF have won the top three in performance this year, with returns of 30.39%, 19.26% and 19.23% respectively during the year.

In an interview with a reporter from China Business News, a person from Guotai Fund said that the recent rise in non-ferrous metals as a whole is inseparable from optimistic macro expectations. The sharp rise in copper prices drove non-ferrous metals to break through the upward logic: the manufacturing PMI (purchasing managers' index) in China and the United States in March improved more than expected, and the domestic policy continued to stabilize, and investors are more optimistic about the macroeconomic recovery. Against the backdrop of strong performance of non-ferrous sector stocks, macro funds continue to dominate the current market. From the perspective of supply and demand, the raw material end as a whole continues to be tight, and some varieties at the smelting end are facing the risk of shrinking or further shrinking.

Macroeconomic expectations are optimistic

Recently, the performance of individual stocks in the non-ferrous metal sector has been very good. Wind data shows that as of April 19, 124 CITIC non-ferrous metal constituent stocks, in the past three months, 78 stock prices have risen positively, among them, North Copper (000737.SZ) rose as much as 100%, ranking first, China Molybdenum (603993. SH), Zhongrun Resources (000506. SZ) ranked second and third in the last three months, with increases of 80.92% and 61.73% respectively.

The strong rise of non-ferrous metals is backed by multiple positive stimuli and catalysts. At the domestic level, the economy has picked up, PMI has returned to the expansion range, and the demand of the non-ferrous industry has gradually recovered. According to the National Bureau of Statistics, the PMI in March was 50.8%, up 1.7 percentage points from February, higher than the critical point, reflecting the stabilization and rebound of the mainland's economic development.

At the international level, the expectation of a Fed rate cut has pushed commodity prices soaring. Stimulated by the expectation of interest rate cuts, the prices of crude oil, gold, non-ferrous metals and other commodities also continued to strengthen.

The relevant people of Guotai Fund analyzed the reasons for the recent strength of non-ferrous metals from various segments. She pointed out that the non-ferrous sector has continued to maintain a high level of attention recently, and the rise in copper prices since March has been driven by the two attributes of commodities and finance. At the same time, affected by the Fed's expectation of interest rate cuts, gold and silver achieved breakthrough rises to continue to help copper prices.

On April 8, the weighted price of Shanghai copper reached a high of 76,260 yuan/ton. As the price gradually approaches the March 2022 high of 76,880 yuan/ton, "the subsequent formation of a large-range breakthrough market requires macro and micro continuous cooperation and resonance, on the one hand, the expectation of interest rate cuts in the non-recession environment is further strengthened, on the other hand, the terminal demand remains strong to undertake the continuous rise in copper prices." A person from Cathay Fund said.

According to the analysis of Guotai Fund, the recent aluminum price has broken through the long shock range since July 2022 and stood at the price mark of 20,000 yuan, the supply of bauxite is still tight, and the price of imported ore is high. In the medium term, aluminum prices have broken through the long shock range, and the constraints at the mine end have affected the stable growth of electrolytic aluminum supply due to the reduction in the input of imported aluminum ingots.

"The zinc market is tight to promote the center of gravity to move up, and the zinc price range is fluctuating under the weak supply and demand; tin supply is still the key to affecting prices; under the pattern of nickel oversupply, the price rebound momentum will still be limited; stainless steel will follow the overall non-ferrous rebound in the short term, but the price upward movement must wait for the industrial contradiction to ease. A person from the Cathay Fund said.

Seize the gold investment opportunity

Since the beginning of 2024, the price of gold has continued to climb and has entered a white-hot stage. From April 8th to April 12th, the fiery sentiment in the gold market continued to heat up, and the international gold price once again refreshed the historical record - 2,430 US dollars.

The domestic gold price is not to be outdone, and residents' willingness to buy gold is high. As of press time, according to the official website of Chow Tai Fook Taobao, the retail price of Chow Tai Fook's denominated gold commodities at 15:27 on April 20 was: pure gold (jewelry, handicrafts) 736 yuan/gram, and investment gold bars 655 yuan/gram.

Regarding the popularity of gold, Wang Xiang, fund manager of Bosera Fund Index and Quantitative Investment Department, pointed out that the geopolitical game in the Middle East has fully stimulated the investment sentiment of domestic investors in commodity assets. U.S. CPI in March exceeded expectations, but strong bullish sentiment continued to ignore the shift in the pace of potential easing, and continued to rise in the face of adversity against the rise in the dollar and Treasury yields.

Looking back at the current round of gold price operation trend since March, Wang Xiang pointed out that the beginning of March was the consensus rush of the easing logic of Europe and the United States, and gradually switched to the increased sensitivity to the geopolitical situation in late March, and the recent week began to continue the emotional game on the basis of the overall commodity heat. The syllogism's rise, despite the gradual increase in amplitude and volatility, is getting closer and closer to the short-term reversal window.

Regarding the recent pullback in gold prices, Wang Xiang said that for investors who have not had time to get on the bus in this period of rapid rise, it will bring a rare opportunity to intervene again. If the subsequent macro evolution does develop towards reflation, then the high bond interest payments and fiscal deficits in the United States, as well as the gradual depletion of the U.S. liquidity safety cushion, mean that the Fed has limited room for further tightening, so that the real interest rate, which is highly negatively correlated with gold assets, will really expand the downside, and the trading odds of gold will increase significantly. It is recommended that investors actively pay attention to the emergence of intervention opportunities after the subsequent price pullback.

Precious metals may continue to rise

Wang Xiang pointed out that from the point of view of sub-performance, the non-ferrous mining sector in the second quarter may still continue to harvest excess performance with the support of more market funds, with the recent strengthening of geopolitical game intensity and the approach of the European and American central bank easing nodes, the field of precious metals in the second quarter may still be worth looking forward to. At present, the transaction volume of second-hand housing has picked up, and whether it can be transmitted to the first-hand market is the main observation point in the next stage.

In the direction of energy metals, Wang Xiang pointed out that the cost competition on the supply side of lithium ore resources will intensify in 2024, the industry will continue to reshuffle, and as the cost curve shifts to the left, high-cost projects may face liquidation, but the downward trend of the overall price center has not changed. The direction of rare earth small metals is marginally improved, the supply of overseas mines is facing bottlenecks, the growth rate of domestic quotas has also slowed down, the downstream new energy vehicles superimposed on the demand for robots are relayed, and the "old for new" policy is expected to bring both stock and incremental demand, and the rare earth price center is expected to gradually rise.

Talking about the follow-up performance of gold prices, Guotai Fund said that in the medium term, although the U.S. economic data has been relatively resilient recently, the service industry data structure has declined to a certain extent, coupled with the decline in inflation data, the Federal Reserve is still expected to start cutting interest rates within the year, and the positive trend of "inflation falling + economic rolling alternate downward movement" on gold prices remains unchanged.

In terms of risk factors, Cathay Fund pointed out that the liquidity risk of the U.S. financial system under the continued high interest rate environment in the United States, the recent interest rate hike in Japan and the withdrawal of YCC (yield curve control) has increased, and the crisis may gradually emerge. In addition, the recent frequent geopolitical risk events, the continued tension in the Red Sea, the intensification of the Russia-Ukraine situation, and the continued rise of market risk aversion. Coupled with the 2024 global leadership elections, market uncertainty may rise overall, and safe-haven demand will also provide some medium-term support for gold prices. The pace of global central bank purchases continues, and the gold pricing pivot has risen.

"Internally, the premium between Shanghai gold and international gold continued to fall to a reasonable range. The general trend of the global recession, the rising demand for additional gold purchases by global central banks, and the global trend of 'de-dollarization' make gold expected to be a new round of pricing anchors, which make precious metals expected to have upward momentum. In the future, we will continue to pay attention to the geopolitical situation, global macroeconomic trends and global central bank gold purchases. A person from the Cathay Fund said.

(Editor: Xia Xin Review: He Shasha Proofreader: Yan Yuxia)