In the first month of 2026, the A-share market has displayed prominent structural trends, with the nonferrous metals sector emerging as one of the most closely watched industries this year. Chen Ziyang, a fund manager at Great Wall Fund who has specialized in cyclical sectors for eight years, remains composed, seeking high-quality investment targets by balancing industry momentum and valuation levels.
Chen Ziyang joined Great Wall Fund’s research department after completing his postgraduate studies in 2017 and has since established his expertise in cyclical industries, building a solid "circle of competence." In August 2023, he officially began his fund management career and currently oversees three products, all of which exhibit a cyclical style. When discussing his perspective on market cycles, Chen emphasizes that short-term fluctuations are merely noise and have little positive impact on investment outcomes. Long-term investing requires patience and rationality; rather than chasing short-term volatility, investors should respect cyclical patterns—entering during undervaluation and exiting during overvaluation—to achieve sustainable returns amid market swings.
Regarding investment opportunities in cyclical industries, Chen Ziyang noted that one approach this year involves identifying relatively undervalued segments within the sector. He maintains a cautious stance toward copper and aluminum in the near term but expresses optimism about gold and minor metals. "It is anticipated that the U.S. may continue to cut interest rates this year, and against the backdrop of geopolitical instability, central banks worldwide continue to purchase gold, sustaining the upward momentum for the metal. Rather than predicting short-term price swings in gold, the investment value of gold-related equities appears more promising. At current gold price levels, free cash flow conditions for related companies remain favorable," Chen analyzed.
Regarding the current opportunity in minor metals, Chen Ziyang believes it is closely tied to strategic reserves. He pointed out that minor metals are widely used in technology and defense sectors, influencing international relations and national competitiveness. Amid ongoing geopolitical tensions, countries are increasing their strategic metal reserves. Coupled with limited supply, no new capacity expected in the next two years, and the ease of passing price increases downstream, minor metals possess significant upside potential.
Beyond nonferrous metals, within the cyclical sector, Chen Ziyang is also optimistic about the chemical industry. He believes that, on one hand, the nonferrous metals sector already achieved nearly doubled gains last year, and institutional allocation ratios are relatively high. On the other hand, the chemical sector currently trades at lower valuation percentiles, with profit expectations gradually improving, making it a key focus area this year.
"Capital expenditure in the chemical industry has declined, and the rollout of new capacity is nearing its end. In an 'anti-involution' context, future chemical projects will face increasingly higher barriers related to environmental protection and energy consumption. Globally, thanks to China’s comprehensive, efficient, and cost-advantaged chemical industry, a rebound in profitability could lead to a revaluation of chemical assets," Chen stated.
When addressing risks in cyclical sectors, Chen Ziyang pointed out that the recent rise in industrial metals has been primarily driven by structural demand. However, both domestic and U.S. consumption exhibit K-shaped divergence. If the U.S. real estate and consumer sectors fail to recover after interest rate cuts, cyclical sectors could face significant pressure. In particular, the chemical industry, which is highly correlated with the traditional economy, may see its growth prospects questioned.