CMSC: The allocation value of non-ferrous metal leaders is gradually emerging; prioritize gold and copper in allocation.

CMSC released a research report stating that the non-ferrous metals industry is supported by insufficient supply elasticity, relatively low inventories, and realized corporate earnings, while macroeconomic uncertainty and declining risk appetite weigh on equity valuations. The previous correction has released some risk, and the allocation value of leaders with earnings sustainability and reasonable valuations is gradually emerging. Looking ahead to Q4, investors should capture allocation certainty through earnings resilience and seize recovery elasticity through macro improvement. If macro headwinds ease and resonate with fundamentals, the sector is expected to see upward revisions to earnings expectations and valuation repair. In terms of allocation, prioritize gold and copper, followed by tantalum, tungsten, and other varieties, focusing on companies with prominent cost advantages, high-quality resource reserves, clear output growth, and stable shareholder returns. CMSC's main views are as follows: 2026Q1-Q3 Review As of September 30, 2026, the non-ferrous metals sector had fallen 10.7% year to date, ranking 17th among first-level industries. Affected by factors such as market style rotation and digestion of earlier gains, the sector underwent a correction with notable internal divergence: minor metals rose, while other sub-sectors pulled back to varying degrees. The pullback in most resource stocks largely reflects valuation-level adjustment rather than weakening fundamentals; in 2026, average prices for most metals were higher than last year, and commodity prices are gradually transmitting to earnings, which is expected to support the sector's valuation repair. Gold In the short term, gold prices are under pressure due to repeated Fed tightening expectations, but continued global central bank gold purchases, weakening dollar credit, and safe-haven demand still constitute long-term support. If the Fed's tightening pace slows later, gold prices are expected to stabilize and rebound in stages, and A/H gold stocks have room for recovery after valuation pullbacks. Silver The supply-demand gap persists, awaiting catalysts from improved liquidity. Silver demand in this cycle is jointly supported by photovoltaics, electronics, and physical investment, and global inventories remain at low levels. If the Fed's tightening pace slows, silver's financial and industrial attributes are expected to resonate, and silver prices will stabilize somewhat. Copper Copper is being repriced by geopolitics. Global new copper mine supply continues to fall short of expectations, TC has fallen below -$200/tonne, sulfuric acid prices have declined, and smelting production cut pressure expanded in Q3. Recently, overseas supply disruptions such as strikes have increased, further strengthening expectations of tightening copper concentrate and refined copper supply. On the demand side, AI-driven power equipment exports maintain growth, while traditional sectors are generally under pressure, but mine-side scarcity provides a solid floor for copper prices. Q4 supply-demand fundamentals are strong; the main variables for copper prices lie in the macro outlook and the direction of the U.S. Section 232 tariff policy. Watch for buying opportunities on dips. Tungsten Hard supply constraints combined with strategic premium; prices are expected to stop falling and rebound in Q4. The Q3 peak season was weaker than usual, and tungsten prices pulled back more than expected, mainly due to a weakening in downstream cemented carbide orders and a slower pace of photovoltaic tungsten wire penetration, compounded by proactive destocking by traders; however, hard constraints at the mine end remain unchanged, with domestic tungsten mine output down 9% year on year in January-August. The overseas tungsten price premium has widened, providing support for exports and domestic tungsten prices. Q4 enters the traditional peak season for cemented carbide, and combined with the release of downstream restocking demand after tungsten prices fell excessively, tungsten prices are expected to bottom out and rebound in Q4. The industry chain's pricing logic has shifted from purely industrial attributes to dual drivers of resource scarcity plus strategic security. China is strengthening the back end of the industry chain, shifting from resource dominance to a pattern of resource + high-end manufacturing with comprehensive Chinese advantages; companies with whole-industry-chain layouts benefit. Tantalum The rigidity of strategic resource supply is becoming prominent, and emerging demand continues to be released. The Rubaya mining area in the Democratic Republic of the Congo suffered two collapses during the year, damaging global supply. Domestic self-sufficiency is less than 5%, with heavy reliance on imports. AI computing power is driving demand for tantalum capacitors and targets, with consumption growth far exceeding mineral output growth, and the supply-demand mismatch is driving tantalum prices higher. Tantalum prices are expected to extend the upward trend from Q3 into Q4. Risk warnings: risk of large fluctuations in raw material and main product prices, technology iteration risk, demand decline risk, and secondary market volatility risk.