Understanding the Market | Afternoon gains in non-ferrous metal stocks expand, highlighting the anti-inflation properties of commodities. Institutions say resource stocks will welcome a Davis Double Play
The afternoon saw an expansion in the gains of non-ferrous metal stocks, with TIANQI LITHIUM rising 8.34%, GANFENG LITHIUM up 7.34%, and ZIJIN MINING increasing 5.62%. Industrial Securities pointed out that the rising expectations for a Federal Reserve interest rate cut will boost commodity demand, and the depreciation of the dollar highlights the anti-inflation properties of commodities. It is expected that resource stocks will welcome a "Davis Double-Play" moment, where the revaluation of key mineral resources will offset the negative valuation pressure brought by the commodity cycle
According to Zhitong Finance APP, the gains of non-ferrous metal stocks expanded in the afternoon. As of the time of publication, TIANQI LITHIUM (09696) rose by 8.34% to HKD 42.6; GANFENG LITHIUM (01772) increased by 7.34% to HKD 33.36; ZIJIN MINING (02899) climbed by 5.62% to HKD 28.18; CHINA ALUMINUM (02600) went up by 5.05% to HKD 6.87; and CHINA HONGQIAO (01378) rose by 4.13% to HKD 24.72.
Industrial Securities pointed out that the expectation of a Federal Reserve interest rate cut is heating up, which will significantly boost demand for commodities. Under the expectation of a depreciating dollar, the "anti-inflation" properties of bulk commodities are becoming more prominent. As of the mid-2025 report, the A-share precious metals and industrial metals sectors are in a "high profitability, low valuation" stage. Considering the transition from high inflation to moderate inflation overseas, and the higher probability of moderate inflation or inflation rising in the U.S. after interest rate cuts; along with the increasing trading activity in the domestic capital market and the "high-cut-low" rotation effect, incremental funds are expected to drive up sector valuations. Resource stocks with relatively solid valuations are likely to welcome a "Davis Double-Play" moment.
In addition, China's power revolution and the global computing power revolution will continue to drive sustained high growth in demand for metal raw materials. Furthermore, the protection and pursuit of key mineral resources by various countries are becoming increasingly evident, with a clear trend towards the concentration of core resources. It is expected that the revaluation of key mineral resources will gradually offset the negative valuation pressure brought about by commodity cycle attributes. The firm believes that the valuation system for resource products will continue to be enriched and optimized in the future
