The US Treasury market has witnessed a pivotal intervention. On August 19, the US Treasury Department announced it would "at least double" its long-dated bond buyback program to counter the long-duration capital strain induced by AI giants' debt issuance. This came after 30-year Treasury yields had surged to their highest level since 2007. In the wake of the policy announcement, long-end yields declined rapidly, the US dollar weakened, and spot gold rebounded strongly by 4.35%, climbing back above the $4,500 per ounce mark. Looking beyond this immediate intervention, the debate surrounding AI capital expenditure, US debt, and fiscal policy is intensifying.
Previously, the team at Fortune Fund posited that the narrative of a peaking second derivative in tech sector capital spending—where slowing expansion in computing power investment, weakening earnings expectations across the industrial chain, easing inflationary pressures, and a subsequent opening for Fed rate cuts would drive capital flows from tech back into precious metals—would take time to transmit to US fiscal dynamics. However, signals from last night's events appear to have arrived early, suggesting that US economic resilience may be weaker than the market anticipates. This scenario inadvertently underscores the long-term allocation value inherent in the non-ferrous metals sector.
The Index R&D Investment Department at Fortune Fund reiterates its core stance on the non-ferrous metals sector: a sustained bullish outlook for the medium-to-long-term cycle. From a long-cycle perspective, the industry is poised for a scenario of both rising volumes and prices, which would solidify corporate profitability. This endows the sector with the characteristics of a "long slope and thick snow"—a durable, compounding growth opportunity—and confers a long-term allocation value that cannot be overlooked. This article will analyze the sector from a 10-year-plus long-term perspective to discuss the fundamental logic underpinning its enduring allocation appeal.
Macro Dimension: The US Easing Stance is Difficult to Reverse, and USD Credit Erosion Favors Non-Ferrous Metals
Some current market participants, operating under the Western economic framework's "rational actor" assumption, view favorably a policy mix of "rate cuts + quantitative tightening + a strong dollar." However, this analysis overlooks the fact that real-world policy is deeply constrained by interest group dynamics and political imperatives. The "rational actor" is merely a theoretical simplification; a political economy perspective offers a clearer view of the practical boundaries of policy. While some compare the potential Fed chair nominee Warsh to Greenspan, the historical contexts are fundamentally different. During Greenspan's era, the 2003 Iraq War showcased the zenith of US hegemony, providing ample policy flexibility. Today, the US finds itself in a protracted geopolitical standoff with Iran, its hegemonic influence is waning at the margins, and the constraints on transformative change are significantly greater. This situation is logically analogous to the institutional dilemmas of the late Qing Dynasty: the Self-Strengthening Movement remained superficial, and the Hundred Days' Reform was met with backlash upon touching deeper vested interests, ultimately leaving change largely at the surface. Currently, the US military-industrial and financial systems continue to reap the benefits of debt expansion, and Warsh himself is a direct beneficiary of this system. The resistance to deep-seated interest group restructuring from within the system is inherently immense; improvements within a single system have a ceiling, and fundamental paradigm shifts often depend on external forces or major exogenous shocks. Against a backdrop of high fiscal leverage and weakening economic resilience, the US finds it difficult to break free from the cycle of loose fiscal and monetary policy. Consequently, USD credit will face continuous dilution over the long term, providing solid macro support for real assets like non-ferrous metals.
Industry Perspective: Aligning with the HALO Hard Asset Logic, Tight Supply-Demand Dynamics, and Heightened National Security Attributes
Technological iteration can revolutionize software and substitute repetitive labor, but it cannot conjure chemical elements from thin air. Basic industrial metals remain the fundamental material foundation that modern productive forces cannot bypass. AI computing infrastructure, the energy transition, and the expansion of high-end manufacturing are essentially large-scale expansions of society's physical hardware, power infrastructure, and terminal carriers, which will persistently drive up aggregate demand for non-ferrous metals. In the precious metals space specifically, while the high-velocity phase of AI-driven productivity gains may temporarily suppress their performance, a peak in the second derivative of productivity change creates a marginal tailwind for them. Furthermore, supply-demand dynamics and national security attributes are elevating the long-term pricing center for resources. On the demand side, AI computing buildout and the global energy transition bring sustained incremental demand. On the supply side, rising global resource nationalism has tightened constraints on mining exploration investment, production, and exports. New mining capacity has lengthy construction timelines, and supply elasticity remains weak. From rare earths and tungsten, to indium phosphide countermeasures triggered by optical module developments, and the "copper squeeze" fears sparked by US tariff expectations, the "national security attribute" has become an undeniable new factor in the pricing of resources like non-ferrous metals.
Valuation Lens: Favorable on a Relative Basis, Not Stretched Historically, and Discounted Internationally—A Clear Margin of Safety
From a valuation perspective, the non-ferrous metals sector currently offers a robust margin of safety. First, in a cross-industry comparison among Shenwan first-level industries, the non-ferrous metals sector's PE (TTM) sits in the mid-to-lower range, indicating significantly less valuation pressure than most other sectors. Second, looking at historical trends, the CSI Non-ferrous Metals Index's PE is near its three-year median, suggesting that future growth expectations have not been excessively priced in. Third, comparing domestic and international markets—taking A-share listed Zijin Mining Group Co Ltd against US-listed Southern Copper Corp as an example—Zijin Mining's valuation is noticeably lower. A-share non-ferrous metals leaders exhibit a "low PE, low PB, high dividend" pricing discount on a global basis, offering both a safety cushion and room for valuation recovery over the long term.
In summary, Fortune Fund believes that the confluence of macro easing fundamentals, rigid industrial demand, and a safety cushion of low valuations and high dividends means that short-term cyclical fluctuations in the non-ferrous metals sector do not alter its long-term upward trajectory. Investors are advised to view the sector with a "long slope and thick snow" perspective, positioning for the medium-to-long-term allocation value through measured buying on dips.
Strong Fundamentals and Low-Position Consolidation Signal a Potential Rebound
Given that different non-ferrous metals have divergent business cycles, rhythms, and drivers, some differentiation is inevitable. For investors bullish on the broader sector, a straightforward approach is to use a comprehensive, all-encompassing vehicle to capture the overall beta. The Non-Ferrous Metals ETF HuaBao (159876) and its feeder funds (Class A: 017140, Class C: 017141) track an index that fully covers copper, aluminum, rare earths, gold, lithium, tungsten, molybdenum, and tin, providing complete exposure across precious, industrial, energy, and strategic minor metals. This allows for a better grasp of the sector's beta moves. Key constituent stocks include industry leaders such as Zijin Mining, CMOC Group, China Northern Rare Earth, Aluminum Corp of China (Chalco), and Zhongjin Gold. Additionally, this ETF is a designated margin trading and securities lending target, serving as an efficient one-click investment vehicle for the non-ferrous metals sector. Data sourced from the Shanghai and Shenzhen stock exchanges and CSI Index Company, as of August 20, 2026.
Note: The individual stocks mentioned are constituents of the target index for the Non-Ferrous Metals ETF HuaBao (159876), with weightings as of the end of July as follows: Zijin Mining at 11.93%; CMOC Group at 7.97%; China Northern Rare Earth at 4.70%; Chalco at 3.55%; and Zhongjin Gold at 3.13%. The index constituents are shown for illustrative purposes only. Descriptions of individual stocks do not constitute investment advice in any form and do not represent the holdings or trading activities of any fund managed by the firm. ETF Fee Explanation: When subscribing or redeeming fund shares, agents may charge a commission of up to 0.5%. On-exchange trading fees are subject to actual charges by the securities firm. The ETF does not charge a sales service fee. Feeder Fund Fee Explanation: For the HuaBao CSI Non-Ferrous Metals ETF Feeder Fund (Class A), the subscription fee is RMB 1,000 per transaction for amounts of RMB 2 million or more, 0.6% for amounts between RMB 1 million and RMB 2 million, and 1% for amounts under RMB 1 million; the redemption fee is 1.5% for holdings of fewer than 7 days and 0% for holdings of 7 days or more, with no sales service fee charged. For the HuaBao CSI Non-Ferrous Metals ETF Feeder Fund (Class C), no subscription fee is charged, the redemption fee is 1.5% for holdings of fewer than 7 days and 0% for holdings of 7 days or more, and the sales service fee is 0.3%. Risk Warning: The Non-Ferrous Metals ETF HuaBao passively tracks the CSI Non-Ferrous Metals Index. The index base date is December 31, 2013, and it was published on July 13, 2015. Its constituent stock composition is adjusted according to the index compilation rules. Historical back-tested performance does not predict future index performance. The risk level assessed by the fund manager is R3-Medium Risk, suitable for investors with a balanced (C3) risk profile or above. For suitability matching advice, please refer to the sales institution. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, or any form of expression) is for reference only. Investors are solely responsible for their own independent investment decisions. Furthermore, any opinions, analyses, or forecasts in this article do not constitute investment advice to the reader in any form, nor do they assume any responsibility for direct or indirect losses resulting from the use of this content. Fund investment involves risks. Past performance of a fund does not represent its future performance. Performance of other funds managed by the fund manager does not constitute a guarantee of this fund's performance. Investors should invest with caution.
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