---
title: "This year's return is 71%. He Fangzhou: The non-ferrous market is far from over, and the timing of gold's rise is difficult to estimate"
type: "News"
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url: "https://longbridge.com/zh-CN/news/262192448.md"
description: "The central bank's gold purchases and de-dollarization are future medium- to long-term themes"
datetime: "2025-10-22T04:21:49.000Z"
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# This year's return is 71%. He Fangzhou: The non-ferrous market is far from over, and the timing of gold's rise is difficult to estimate

Recently, He Fangzhou from WanJia Fund and Shen Haojun, the head of the metal industry at Zhejiang Merchants Securities, made judgments on the medium- and long-term trends of non-ferrous metals, especially gold, in the live broadcast room of China Securities Journal ETF Point Gold Exchange.

The investment class representative has summarized the key points as follows:

1.  From the perspective of long-term narrative logic, liquidity support, and macro background, we believe that the non-ferrous metal market is far from over; it is likely still in the initial stage and has not yet reached the halfway point.
    
2.  The strength of gold can be said to have started this year or even last year, and I believe the major logic for the next two to three years will not change. Interest rate cuts are merely a catalytic factor, not the core; the core remains the weakening of the dollar's credit, which is the central logic behind this round of gold price increases.
    
3.  The upward cycle of gold has not yet ended, at least until next year or even the year after. The narrative logic of central bank gold purchases and de-dollarization will still be a medium- to long-term theme in the future.
    
4.  Copper resources are not significantly overvalued. At this point, I believe that non-ferrous metals, especially industrial non-ferrous metals, are more driven by the narrative of copper. Other metals may gain market attention and allocation due to the increased consumption of copper resources.
    

He Fangzhou has 9 years of experience in the securities industry and less than 2 years of experience in fund management. He joined WanJia Fund in June 2022 and is currently the fund manager of the quantitative investment department, having previously served as an assistant fund manager in the same department. He has also worked as an operations manager in the operations department of Huatai-PineBridge Fund and as a researcher in the index and futures investment department of Da Cheng Fund Management. The total asset scale of the fund he manages is 7.718 billion yuan.

The WanJia CSI Hong Kong Stock Connect Innovative Drug ETF he manages has performed remarkably well. In the ranking of public fund performance for the first three quarters, this fund ranked 14th with a return rate of 114.01%.

With market fluctuations, the fund's gains have undergone normal adjustments. As of October 21, its year-to-date increase was 92.97%, still making it the top performer among 3,416 similar products.

The chart below shows the performance of the fund at various stages:

It is worth noting the change in the fund's management. On June 25 of this year, He Fangzhou was appointed as a fund manager, co-managing with Yang Kun; after a brief three-month co-management, the fund dismissed Yang Kun on September 26, officially placing He Fangzhou in sole charge The three managed colored ETF funds have also performed excellently. As of October 21, during He Fangzhou's tenure of approximately 353 days (since November 2, 2024), all three funds have achieved returns of 66%-71% this year, ranking in the top 3 among their peers; their returns over the past year have also remained robust at over 60%.

Recently, the non-ferrous metal sector has collectively strengthened, with gold repeatedly hitting historical highs; however, it experienced a rare drop yesterday. What will the future trend be?

The investment workbook class representative has compiled the highlights shared by He Fangzhou and Shen Haojun for everyone:

## **Logic Behind the Strength of Non-Ferrous Metals**

Q: The recent increase in the non-ferrous resource sector is quite significant. Could the two guests discuss the fundamental logic behind the recent strength of these assets? Mr. He, please share your thoughts first.

He Fangzhou: This year, the primary industry or major thematic index of non-ferrous metals has generally increased by 70% to 90%. In terms of indices alone, many individual stocks have already doubled.

Since the beginning of this year, ranked by primary industry, the return of the non-ferrous metal thematic index is over 20% higher than that of the second-ranked communication industry index. The performance has been very strong and impressive.

I believe the underlying logic and reasons include the following aspects:

First is the macro liquidity issue, namely the Federal Reserve entering a rate-cutting phase.

During the rate-cutting process, non-ferrous metals, as globally priced commodities, are influenced by global fundamental recovery expectations and economic cycle changes on one hand, and are closely related to the US dollar index and the global wave of rate cuts on the other.

In the context of loose liquidity and rate cuts, commodities will usher in a favorable dividend window period.

Secondly, we believe there is a supply-demand mismatch issue. On the demand side, whether it is grid upgrades, industrial transformation and upgrading, or global smart grid construction, the demand for non-ferrous metals, especially copper, is very high. Against the backdrop of such industrial upgrades and structural changes, our demand for non-ferrous metals continues to rise.

Additionally, I believe the recovery of the manufacturing sector is also a factor.

After the pandemic, the global economy is gradually moving from decline to bottoming out and then to recovery. Whether it is infrastructure construction or domestic-driven consumption recovery, consumption upgrades, and major infrastructure projects, the demand for metals such as copper, aluminum, and zinc is very high.

Policies introduced domestically to stabilize the real estate market and the property sector will also drive an increase in demand for the non-ferrous metal industry. This improvement in fundamentals, combined with ample macro liquidity, has jointly propelled this round of sustained increases.

Looking at the supply side: first, global copper mine production capacity is relatively slowing down. Global copper mine production is expected to be 21 million tons in 2024, with a year-on-year growth of only 1.2%, far below the actual demand growth rate, indicating a significant supply-demand mismatch Secondly, environmental policies are becoming increasingly stringent. The difficulty of mining development is increasing, and the environmental regulations in major copper-producing countries such as Peru and Chile are becoming stricter, leading to longer project approval cycles. The supply side struggles to keep up with the pace of demand growth, which also drives up prices.

In addition, recent hot topics, such as international relations issues and friction between major powers, have complicated the geopolitical environment and triggered market expectations for rising prices of non-ferrous metals.

Therefore, from the background of liquidity easing and interest rate cuts, to the mismatch of supply and demand, and the enhancement of the strategic position of non-ferrous metals, all provide logical support for the strong trend of non-ferrous metals.

## **The gold upcycle will not change, at least until next year and the year after**

Host: What is the logic behind the current strength of gold? How is it different from the logic of strength at the beginning of the year? Or is it a continuation of the main line from the beginning of the year?

Shen Haojun: The strength of gold can be said to have started this year or even last year. I believe the major logic for the next two to three years will not change, mainly because of the weakening of the US dollar.

Why did gold start to rise at the end of August? Essentially, the market is trading on expectations of the Federal Reserve cutting interest rates. However, the interest rate cut is just a catalytic factor and not the core; the core remains the weakening of US dollar credit, which is the central logic behind this round of gold price increase.

As for whether the peak of gold is immeasurable, I believe it should be viewed dialectically.

First, a risk warning: there is no asset that only rises and never falls, but this is certainly within a specific time period. Gold has experienced bear markets, but **I believe this round of gold bull market will continue.**

What is the underlying logic? **It is difficult to accurately determine the peak of gold, but I can judge the time of the rise.**

For example, Shanghai gold started from 200, 300, or 500, and has now surpassed 900, and may even break through 1100 in the future; or COMEX gold prices have risen from 2300 to now surpassing 4000, and these specific points are hard to judge. Because gold itself does not rely much on supply and demand or costs. What does it rely on?

I believe the time window for this round of gold price increase has opened, and the space for rising has naturally opened as well. If viewed from an annual perspective, this round of gold bull market actually started in 2022 and has been bullish for several years.

Recently, there have been signs of a slowdown in the rise. From this perspective, I believe that the gold upcycle has not yet ended at least until next year or even the year after.

Because the cycle of a weakening US dollar and the downward cycle of US dollar credit will not end for at least another year. The time and space for gold to rise will also open accordingly.

## **The long-term narrative logic of this round of gold and the time of rise are difficult to estimate**

Question: What is your logic for asset allocation in this regard? How long do you think the market's sustainability can last? Mr. He.

He Fangzhou: I believe the long-term narrative, logic, and **time of rise for this round of gold are difficult to estimate.**

Because essentially, gold is not traded based on supply and demand, nor is it purely based on interest rates, but rather reflects a kind of confidence.

For a long time, gold has been linked to the US dollar, and even after the end of the Bretton Woods system, it is still dominated by interest rates, the US dollar index, and risk aversion sentiment.

Globally, central banks are continuously purchasing gold, and the share of gold in foreign exchange reserves is growing like a snowball Secondly, geopolitical relations, such as the Russia-Ukraine conflict, trade conflicts, and global political uncertainties, have kept market risk aversion at a high level. Occasional external black swan events can also act as catalysts, causing gold prices to surge in pulses.

Thirdly, there are expectations of a recession in the U.S. economy.

Historically, during the Federal Reserve's interest rate cut cycles, the performance of the U.S. economy has typically been poor.

For example, in 2008, against a backdrop of continuous interest rate cuts, issues within the U.S. economy, social problems, and real estate issues continued to erupt, hoping to achieve economic buffering and a soft landing through such policy measures.

In this round of interest rate cuts, there has been considerable discussion and trading logic regarding the U.S. economic recession and slowdown.

Most importantly, there is the issue of U.S. debt. Gold more reflects the cracks in confidence towards international assets, external environments, and the U.S. dollar.

Since the beginning of this year, the amount of U.S. outstanding public debt has approached $40 trillion. At high interest rate levels, debt expansion remains at a high level, and the dollar is naturally in a passive state.

Against this backdrop, most countries will rationally choose to reduce their dollar positions in foreign exchange reserves and instead purchase assets that can withstand the impact of dollar credit risk, with gold being one of the top choices.

Therefore, the recent surge in gold prices also reflects this risk aversion and confidence issue. We believe that **the narrative logic of central bank gold purchases and de-dollarization will remain a medium to long-term theme in the future.**

## **Copper is not significantly overvalued,** industrial non-ferrous metals are more driven by the copper narrative

Host: We just mentioned fields including AI and new energy, which are seen as the long-term main storyline driving demand for certain metals.

Which specific metals are genuinely driven by demand in these emerging fields? Which non-ferrous metal segments might be overvalued currently? Mr. He, please provide your insights.

He Fangzhou: I believe that the demand for electricity in fields like AI and new energy is very real. Ultimately, in practical applications and production, electricity is the core proposition.

New energy vehicles require electricity, computing graphics cards require electricity, and future AI models and even physical robots will also be centered around electricity. Wherever electricity is needed, power transmission is required.

We can see that the demand for raw materials like copper cables and wires is very strong. Therefore, this demand pull for copper is very tangible.

Secondly, the rapid popularization of domestic new energy vehicles, along with significant increases in replacement rates and market share, has driven the demand for charging piles, charging stations, and home charging piles.

Additionally, photovoltaic power stations consume a large amount of copper for optical cables.

Building a one-megawatt photovoltaic power station consumes about 5 tons of copper for optical cables. Goldman Sachs predicts that by 2030, global power grids and power infrastructure will contribute over 60% of the growth in copper demand.

Therefore, for copper, the "king of commodities" and the most important metal among non-ferrous metals, it is akin to the "industrial blood" of the new era. We believe that copper resources are not significantly overvalued.

On the contrary, to some extent, due to the tendency of the industrial non-ferrous sector for certain metals to drive up the prices of other metals, for example, when gold rises, silver and platinum may also rise; an increase in copper prices may drive up resources like aluminum, nickel, and cobalt Under this logic, my personal view on copper is relatively firm. As for aluminum, its production capacity is restricted by policy red lines. As long as real estate prices stabilize and re-enter a positive cycle, such assets may also rise at this point due to the influence of copper prices. However, in the long term, it will tend towards the process of social and economic recovery.

Therefore, at this point, I believe that non-ferrous metals, especially industrial non-ferrous metals, are more driven by the narrative of copper. Other metals may gain market attention and allocation due to the increased consumption of copper resources.

In particular, the market's emphasis on copper resources can be seen in the stock indices, commodity futures, and changes in global copper demand and prices, all reflecting this demand or story driven by copper.

Other metals may require later economic data changes, as well as applications in new productive forces, new energy, artificial intelligence, and other fields to reach a certain stage before their prices can match the current valuations and positions.

## **Short-term volatility is high, consider phased investment in the non-ferrous sector**

Q: Mr. He, what do you think? How should investors assess the short-term and medium-to-long-term outlook? Should they get on board?

He Fangzhou: Alright, from the recent short-term volatility, the non-ferrous sector has seen significant fluctuations after the National Day holiday. Even for industry theme indices, the non-ferrous metal sector index may fluctuate more than 5% in a single day. Individual stocks are even more volatile.

As market investors, as we just discussed, one might want to buy but worry about buying at a high point, while not buying might lead to seeing a relatively strong trend.

How do we view this? First, short-term volatility is definitely amplified.

For investors with lower risk tolerance, it may be wise to be more cautious and at least adopt a phased investment approach to allocate these assets.

Firstly, this sector has performed strongly since April this year, accumulating significant gains and profits. External event disturbances, internal regulatory issues, or market cooling statements may impact market sentiment.

From the perspective of industry cycle logic, issues such as the opening of the interest rate cut channel, weakening dollar credit, and market supply-demand relationships cannot be quickly resolved in the short term.

Under the influence of multiple factors, the fundamentals supporting long-term upward trends, as well as the profit improvements brought about by companies' efforts to reduce internal competition, are all medium-to-long-term positives for the sector and industry.

In the short term, geopolitical factors such as tense international relations and issues between major powers may cause price fluctuations.

Therefore, from the perspective of medium-to-long-term or short-term event catalysts, these assets are still worth investors' attention.

However, the non-ferrous metal sector is ultimately a sector with strong cyclicality.

For resource products, on one hand, it is necessary to pay attention to the macroeconomic cycle and changes in economic data to reasonably adjust positions; on the other hand, it is essential to closely track the improvement of corporate fundamentals, including corporate profits and capital expenditures, to maintain confidence in asset allocation.

## **Non-ferrous valuations are relatively reasonable**

Host: Many times we focus on pricing and valuation issues. Currently, many non-ferrous stocks have already seen a rise, and valuations are not as cheap as they were at the beginning of the year.

How do we measure the current valuation level of the sector? Should we focus more on traditional PE and PB, or should we value it based on resource reserve value? Is the current price high or worth it?

He Fangzhou: Indeed, as mentioned earlier, the non-ferrous sector has seen considerable gains since this year, especially since April, driven on one hand by macro narratives and on the other by the abundant liquidity in the market Taking the theme index of non-ferrous metals as an example, the increase in the first-level industry and sub-theme indices is generally around 70% to 90%. However, if we look at static indicators, taking the industrial non-ferrous index I track as an example, the current static PE is about 22 times, PB is about 3.4 times, and the price-to-cash ratio is about 12.9 times. Overall, the valuation percentile is below 50% compared to the past decade.

Therefore, from the perspective of static valuations such as PE and PB, the valuation is relatively reasonable.

Secondly, from a macro perspective, the recovery-driven rise in PPI, as well as the market's hope to drive up non-ferrous metal prices through narrative conclusion and the opening of the recovery cycle, indicates that the endogenous momentum for PPI increase is relatively strong.

Thirdly, against the backdrop of external interest rate cut expectations, the current weak dollar credit and the decline in the dollar index under the dollar pricing system have led to an increase in the prices of financial attribute physical assets, which is also an important reason for the appreciation of companies with mineral resources.

Finally, regarding whether to focus more on traditional PE, PB valuations or resource reserve value valuations, I believe that PE and PB valuations are more traditional and can provide investors with a mental benchmark; while resource reserve value valuations have certain rationality from a long-term trend logic perspective, as they reflect the intrinsic value of companies with mineral resources. However, reserve value can also be affected by external factors, policies, mining restrictions, and changes in mineral product positions.

Therefore, the valuation of companies or stock prices is ultimately a dynamic process. If we want to measure whether something is expensive or worth its value, I believe that as investors trading stocks or commodity futures in the secondary market, we should use a multi-dimensional approach to comprehensive valuation rather than a single method.

We hope to buy great companies or the most valuable resources and companies at reasonable prices.

## The non-ferrous market is far from over; it is only in the initial stage

Host: Just now, Mr. He mentioned the WanJia CSI Industrial Non-Ferrous Metals Theme ETF product and the non-ferrous metal categories it invests in. We would like to ask Mr. He, is this index a relatively good buying point now?

He Fangzhou: Well, from the current point of view, this index has risen more than 70% this year, so it is definitely not a relatively cheap variety.

But as mentioned at the beginning, it is a variety with relatively reasonable valuation. For such investment varieties, we recommend smoothing out the investment time and adopting a regular investment approach.

Because from the perspective of long-term narrative logic, liquidity support, and macro background, we believe that the non-ferrous market is far from over; it may only be in the initial stage and has not yet reached halfway.

However, it is true that from the beginning of the year to now, the cumulative increase and profits are high, and short-term fluctuations are definitely much larger than those in sectors that have not risen.

Therefore, for index products, the best approach is to extend the investment and allocation time nodes.

First, diversify risks through index investment; second, conduct regular investments, controlling each funding amount at a reasonable and risk-controllable level to maintain a better investment mindset.

For example, if we invest 70%-80% or even all assets into one sector, a short-term fluctuation of a few percentage points at a certain time can have a significant impact on the investor's mindset, and long-term holding requires daily struggles with human nature.

But if we reduce each investment and diversify through regular investments, controlling the buying cost within a reasonable and stable range, for instance, from last year to the beginning of this year with regular investments, the current index profit may have reached 60%-70%. This way, the holding mindset and experience will be much better At the same time, if there is a long-term upward trend in the future, through diversified investment, extending the time frame, and smoothing costs, the determination and mindset for long-term holding will also improve.

Source: Investment Workbook Pro Author: Wang Li

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