Zhixin Finance and Economics APP learned that gtja released research reports stating that in 2024Q3, the nonferrous metals sector as a whole reduced its holdings in funds, but still remains in an overweight position, with copper and gold sectors being the most reduced. From a fundamental perspective, bullish on aluminum, rare-earth magnetic materials, and PCB copper foil/CCL copper-clad laminate sectors. The Federal Reserve initiated an interest rate cut cycle, resonating with overseas soft landing and domestic demand recovery expectations, which is bullish for the industrial metals sector. Specifically for aluminum, the oversupply of bauxite to alumina is expected to continue, and with the electrolytic aluminum production capacity approaching its ceiling, bullish on the investment opportunities brought by the overall oversupply in the aluminum industry chain by 2025. The demand side increment for rare earths, PCB copper foil/CCL copper-clad laminates is expected to continue, with a well-established supply side, bullish on the opportunities for companies in the sector to see both volume and price rise together.

In 2024Q3, the nonferrous sector rebounded with the overall institutions reducing their holdings in the sector.

In 2024Q3, as the market's expectations of re-inflation receded following concentrated trading in Q2 and ahead of overseas recession expectations, nonferrous metal prices saw a significant decline, prompting adjustments in equity assets. At the end of September, following the rebound of the overall market, the non-ferrous sector saw an increase of 10.8% during the entire quarter, underperforming the CSI 300 index by 5.3 percentage points.

In 2024Q3, the fund's heavy overweight position in the nonferrous sector was 1.96%, an increase of 37bp from 1.58% in 2023Q3, higher than the historical average overweight position of 0.98% for the nonferrous metal sector. The corresponding holding value accounted for 4.81% of the fund's stock investment value, while nonferrous metals accounted for 3.37% of A-share market value. The sector was overweight by 144bp in 2024Q3, but the overweight percentage compared to Q2 narrowed.

Industrial metals saw a slight reduction in holdings, but the holding ratio remains at historical highs.

In 2024Q3, with the fading of overseas re-inflation expectations, copper, aluminum, and other major industrial metal prices experienced varying degrees of correction, with institutions slightly reducing their holdings of industrial metals. The heavy overweight ratio in 2024Q3 decreased from 1.43% in 2023Q3 to 1.25%; the industrial metals sector was overweight by 136bp in 2024Q3, narrowing the overweight percentage compared to 155bp in 2024Q2. The start of the Federal Reserve's interest rate cut cycle, together with expectations of overseas soft landing and continuous improvement in domestic demand, is generally positive for the industrial metals sector.

Precious metals are being divested, but the holding proportion still exceeds the historical average.

In Q3 2024, the Federal Reserve entered a rate cut cycle, with the first rate cut of 50 basis points, exceeding expectations. However, during the same period, US economic data did not show obvious recession. The market worried about inflation after the rate cut, benefiting gold from the downward interest rates, anti-inflation demand, leading to continued price increases. Due to the previous significant gains, the Q3 increase weakened compared to the previous quarter. In 2024 Q3, precious metals funds' heavy positions accounted for 0.34%, a 9 basis point decrease from Q2 2024, still higher than the historical average heavy position of 0.17%; in terms of allocation, the overweight decreased from 53 basis points to 38 basis points compared to Q2 2024.

In terms of symbol allocation, adding positions in rare earth magnetic materials sector: Buy ratings for China Northern Rare Earth (600111.SH), China Rareearth (000831.SZ), JL Mag Rare-Earth (300748.SZ). Beneficiary symbols: Aluminum Corporation of China (601600.SH), Shengyi Technology (600813.SH), Copper Crown Copper Foil (301217.SZ).

Risk warning: Expectations of significant fluctuations in the Federal Reserve's rate cuts and domestic demand falling short of expectations.