The cyclical sector, particularly non-ferrous metals, has emerged as one of the most prominent trends in the A-share market this year. Against the backdrop of a weakening US dollar and marginally looser global liquidity, the cyclical sector is widely expected to sustain a significant medium-to-long term uptrend.
Reviewing the evolution of A-share investment styles over the past three decades, the prominence and fate of cyclical fund managers have fluctuated alongside market cycles. During the period of rapid domestic economic growth from the 1990s to the early 2000s, cyclical industries such as coal and metals thrived, marking a golden era for cyclical fund managers. However, as economic restructuring advanced and emerging industries like mobile internet rose to prominence, growth-style fund managers gradually became mainstream, while cyclical fund managers experienced a relative decline in attention.
An interesting phenomenon has emerged: whether in sell-side brokerages or buy-side public fund management, those specializing in cyclical sectors are mostly from the post-70s and early post-80s generations, whereas those focused on technology and growth sectors are predominantly younger individuals born after 1985, 1990, or even 1995.
Amid the current cyclical market surge, a post-90s fund manager has captured public attention with impressive performance—Chen Ziyang from Great Wall Fund.
1. The Journey of a Gen Z "Outlier" Chen Ziyang is one of the few post-90s cyclical fund managers in the market. Having experienced both bull and bear cycles since entering the industry, he possesses a deep and respectful understanding of market cycles.
After graduating with a master's degree from Tsinghua University in 2017, Chen joined the research department of Great Wall Fund. Initially focusing on cyclical industries like steel and non-ferrous metals, he later expanded his coverage to include home appliances, building materials, and further extended to chemicals and transportation. Under Great Wall Fund's comprehensive investment research training system, Chen accumulated expertise across various cyclical sub-sectors, laying a solid foundation for his subsequent investment practice.
At the start of his career, he witnessed the supply-side reform rally, where steel sector profits expanded significantly. However, by 2018 and 2019, many steel mills expanded capacity under the guise of "capacity replacement," sowing the seeds for a subsequent industry downturn.
"An industry can transition from high profitability to industry-wide losses in just two to three years," Chen noted. This experience gave him a profound appreciation for the ruthlessness of cycles and heightened his focus on the logic behind industrial fluctuations.
In the second half of 2023, as the cyclical sector approached a turning point, Chen, after six years as a researcher, was appointed fund manager. He co-managed products with the company's Chief Investment Officer, Yang Jianhua, and accurately captured the subsequent non-ferrous metals rally.
In 2025, the non-ferrous metals sector performed strongly overall, though sub-sector performances diverged—precious metals led gains due to safe-haven demand and loose liquidity, while industrial metals like copper and aluminum outperformed, with zinc and lead facing relative pressure.
Chen's strategy centered on the revaluation of resource assets, the recovery of mid-stream manufacturing, and valuation repairs within sectors. He flexibly adjusted his investment approach in response to macroeconomic shifts. According to him, the first half of 2025 focused on the restocking logic amid supply constraints and global supply chain security concerns; the third quarter capitalized on the rally driven by central bank gold purchases, while exploring opportunities in industrial and minor metals, alongside the chemical sector's profit recovery potential from "anti-involution" policies; the fourth quarter followed the upward trend in gold, copper, and aluminum prices, selecting stocks based on fundamentals and valuation attractiveness.
This series of precise moves stemmed from Chen's deep understanding of cyclical industries, supported by Great Wall Fund's macro trend analysis and an integrated investment research mechanism that enhances decision-making.
2. 2026 Outlook: Bullish on Precious Metals, Minor Metals, and Chemicals How should investors view market opportunities in 2026? Addressing the most pressing questions about the non-ferrous metals trend and investment strategy, this top-performing fund manager offered clear insights.
Looking ahead to the 2026 market, Chen believes stable economic growth expectations, coupled with accommodative monetary and fiscal policies, will create a relatively favorable environment for equity markets.
Chen's "optimistic outlook" is based on the following: 2026 marks the beginning of the 15th Five-Year Plan, with the economy stabilizing and improving, and industrial structure continuously upgrading. Faced with external shocks, there is greater experience and confidence in response.
However, unlike last year's relatively extreme structural trends, market styles in 2026 are expected to become more balanced.
Regarding specific sector opportunities, Chen's views are unequivocal: 1) Non-ferrous metals: Despite significant gains in 2025, fundamentals remain robust with no valuation bubbles. Minor metals are in a strategic reserve enhancement cycle, with resource scarcity and limited new capacity making their investment value noteworthy; for precious metals, central bank gold purchases and household asset allocation trends remain intact, supporting gold's long-term investment logic; silver, with low inventories and loose liquidity, enjoys strong short-term price support; for industrial metals like copper and aluminum, caution is warranted in the short term, but long-term demand drivers from energy transition and AI development remain intact. 2) Chemical industry: Capital expenditure has declined, new capacity additions are nearing completion, and the sector is transitioning from oversupply to balance or even shortage, with profitability expected to recover. Current sector valuations and profit percentiles are at historical lows, and with macro-level catalysts, this presents a left-side opportunity with limited downside and attractive upside potential, warranting attention for value re-rating. 3) Property chain: A conservative stance overall. Property serves both investment and residential purposes, with the former constrained by low rental yields and the latter dependent on future income expectations. However, structural opportunities exist, such as companies expanding into Belt and Road markets and leading firms gaining market share during the downturn, offsetting sector-wide pressures.
"Overall, I will focus on structural opportunities within non-ferrous metals and seek leading opportunities in chemicals," he said.
For individual investors keen on precious metals, Chen advises that short-term price fluctuations may be less critical. For company operations, short-term price volatility is difficult to control; only under stable price trends can listed companies reflect performance in financial reports.
3. Investment Framework: Centered on Capital Cycles Understanding, respecting, and skillfully leveraging cycles define Chen's professional journey.
In his view, the underlying logic of cycles is clear: a highly profitable industry attracts significant capital inflow, leading to expanded capital expenditure, intensified competition, lower overall profitability (ROE), and eventual industry adjustment. This adjustment persists until some firms exit, capital contracts, and industry structure optimizes, allowing profitability to recover.
From a behavioral perspective, greed and fear amplify cyclical fluctuations. Cycle peaks are often driven by greed, while troughs are dominated by fear. This demands that fund managers possess counter-cyclical and counter-intuitive thinking and operational capabilities.
In terms of investment strategy, Chen believes that industries with stable medium-to-long term profitability rely on sound industry structure. For cyclical products, structural changes are driven by capital expenditure cycles, which are key to profitability shifts.
Based on this understanding, Chen's strategy involves positioning when both ROE and PB are low, unifying probability and payoff. He places particular emphasis on valuation, adept at identifying undervalued opportunities to capture excess returns amid cyclical fluctuations.
On the path of cyclical investing, Chen consistently walks the balance between "evolution" and "persistence."
His persistence lies in long-term dedication to cyclical sectors. From initially focusing on steel and non-ferrous metals, to developing a respectful approach through market cycles, and constructing a "capital cycle-centric" investment framework, he has never deviated from the core of cyclical investing.
His evolution involves continuously expanding his research scope. Encouraged by the firm's emphasis on cross-disciplinary research and capability expansion, he moved beyond the traditional "coal and metals" focus of previous cyclical managers, incorporating home appliances, building materials, chemicals, transportation, and even machinery into his coverage. Chen believes cyclical fluctuations across different sectors are not entirely synchronous; by combining sectors, he aims to smooth out or reduce exposure to single-cycle risks, seeking investment opportunities at every stage.
"I've been fortunate to cover and research various industries over the years, observing other star sectors. This has given me a calmer perspective on the industry," he reflected.
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