When the market begins to favor heavy assets

Since the beginning of this year, the market has once again focused on “heavy assets.”

Judging by the performance of different sectors in the A-share market over the course of this year, sectors such as coal, oil and petrochemicals, power, and public utilities have led in year-to-date gains, while the technology tracks that were once highly sought after have shown differentiation.

This clear contrast between sectors has gradually led the market to form a consensus: those “hard assets” that cannot be overthrown by AI are becoming a safe haven in an era full of uncertainty.

CITIC’s year-to-date performance by first-level industry (up/down %)

Source of data: wind, as of 2026/3/19. Short-term up/down data for the index is for analysis reference only and does not indicate future performance, nor does it constitute any undertaking or guarantee regarding fund performance. The fund involves risks; investment should be done with caution.

This is also the main reason why HALO trading has been popular recently.

What is HALO

That is the initialism of “HeavyAssets, LowObsolescence** (heavy assets, low turnover rate).**” This concept was first proposed by JoshBrown, CEO of an overseas investment institution. It was then written into investment reports by Morgan Stanley and Goldman Sachs, and became popular on Wall Street.

Its core idea is that under the AI wave, capital tends to favor tangible assets that can be built and are difficult to replace. Such assets not only have physical barriers typical of heavy assets, but also possess risk-resilience characteristics of a low turnover rate. They are the key underlying confidence for riding through market cycles.

Heavy assets vs. light assets

To understand the rise of HALO assets, you first need to clearly see how the market logic for heavy assets and light assets has changed over the past decade, as well as the core logic behind the current “shift in offense and defense.”

Over the past decade, global capital markets have, for a time, been wildly rewarding “light-asset” models. These assets do not require huge capital expenditures to build factories or purchase equipment; they can expand quickly relying on code, traffic, and business models alone. As a result, software, internet platforms, and light-asset services have produced many high-valuation companies.

In contrast, heavy assets have long been neglected by the market, with valuations continuously suppressed. The key reason lies in the inherent nature of heavy assets: massive capital expenditures are required upfront, involving large investments to build physical facilities and purchase equipment; the payback period is long—often years or even decades elapse from investment to generating stable cash flows; and liquidity is weaker, making asset monetization far more difficult than with light assets. Therefore, in market environments that prioritize rapid growth and high valuations, heavy assets have always been at a “disadvantage.”

But as market sentiment toward AI shifts from狂熱 to rationality, concerns become increasingly prominent: on the one hand, whether the massive investments by tech giants in AI infrastructure can translate into corresponding returns remains highly uncertain; on the other hand, the rapid development of AI applications may overturn existing software and light-asset business models, causing valuations in these sectors to fall significantly.

Under such concerns, investors started to flee light assets with high volatility and high uncertainty, and instead sought “heavy assets” with deep “moats” that are not easily replaced by AI technology waves.

How long can HALO trading last?

The key to judging the sustainability of the HALO main theme is to see clearly the driving logic behind it—it is not a short-term theme for speculation, but a long-term trend of assets being repriced in the context of the rapid development of AI.

Demand side

The continued development of the AI industry is the core support for the long-term existence of HALO assets. AI iteration will not stop, and whether it is computing power, storage capacity, transport capacity, or electricity—all are indispensable physical foundations for AI development. The more AI develops, the stronger the demand for these heavy assets becomes, and the more clearly their strategic value is revealed.

Supply side

Heavy-asset construction has a long cycle, high capital expenditures, and high entry barriers, making it difficult for supply to expand quickly. Against the backdrop of continuously rising demand, the rigidity of supply will support a sustained increase in the value of HALO assets.

Market side

The market’s pursuit of “certainty” will exist for the long term. Currently, the global economic recovery is weak, geopolitical conflicts are intensifying, and the pace of technological iteration is accelerating. As a result, uncertainty in the market has increased significantly, and investors’ preference for “tangible and visible” hard assets will become a long-term trend.

That said, it needs to be clarified that the popularity of HALO is an adjustment to correct the market’s long-standing underestimation of heavy assets in the past. This does not mean that light assets have completely lost opportunities. The two are not in an opposing relationship; rather, they exhibit stage-by-stage differences in strength under different market conditions, jointly forming a diversified investment ecosystem in the market.

How to allocate for HALO trading?

In the global HALO asset landscape, China’s assets occupy a particularly prominent core position. China’s assets’ revenue is highly concentrated in real-economy sectors such as mining and manufacturing. From a neutral industry perspective, Chinese listed companies generally have a higher proportion of tangible assets to total assets than U.S. peers in the same industry. They naturally have stronger resilience against being overturned by AI, and are an asset cluster worldwide that most closely aligns with HALO’s core logic of “heavy assets, low turnover rate.”

Among many Chinese HALO asset classes, power grid equipment is undoubtedly one of the key targets with the greatest growth potential and global competitiveness. The end destination of computing power is electricity. The AI computing-power boom is profoundly reshaping the structure of electricity demand. The global tech giants’ AI arms race is evolving into an arms race for electrical power infrastructure. Power grid equipment has also upgraded from a traditional manufacturing sector into a core link in “computing-power infrastructure.”

In addition, aging power grid facilities and a significant supply gap in Europe and the U.S. create opportunities for Chinese companies. According to an IEA report, the supply gap for power transformers in North America reaches 35%, and import dependency exceeds 80%. This provides a historic opportunity for Chinese equipment companies. With a complete industrial chain and fast delivery cycles, Chinese companies are becoming an indispensable force for upgrading power grids globally, and export orders are seeing both volume and price rising.

Therefore, against the backdrop of a weak global economic recovery, intensifying geopolitical conflicts, and accelerating technology iteration, the importance of physical assets—once overlooked in periods of orderly prosperity—has become even more prominent. And as China’s assets are the core force that is closest to the real-economy attributes of physical production, its reassessment of value may just be getting started. Interested investors may take the opportunity to allocate accordingly.

State-owned Enterprise Mutual Benefit ETF China Guotai 517090

Link A: 019259

Link C: 019269

Power Grid Equipment ETF China Guotai 561380

Link A: 023638

Link C: 023639

Risk disclosure

Market views may change with the market environment and do not constitute any investment advice or commitment. Any indexes mentioned in the article are for reference only and do not constitute any investment advice, nor do they constitute forecasts or guarantees of fund performance. The above funds are equity funds; theoretically, their expected returns and expected risk levels are higher than those of hybrid funds, bond funds, and money market funds. The ETF funds mentioned are index funds, which mainly adopt a full replication strategy to track the underlying index; accordingly, their risk-return characteristics are similar to those of the market portfolio represented by the underlying index. When the fund invests in stocks underlying the Hong Kong Stock Connect, it will face unique risks arising from differences under the Hong Kong Stock Connect mechanism in the investment environment, investment targets, market systems, trading rules, etc. When the ETF linked fund’s target ETF is mentioned as an equity index fund, its theoretically expected return and expected risk levels are higher than those of hybrid funds, bond funds, and money market funds. This fund mainly tracks the performance of the underlying index by investing in the target ETF, and therefore has risk-return characteristics similar to those of the securities market represented by the underlying index and the underlying index itself. When the fund can invest in stocks underlying the Hong Kong Stock Connect, it will face unique risks arising from differences under the Hong Kong Stock Connect mechanism in the investment environment, investment targets, market systems, and trading rules, etc. The State-owned Enterprise Mutual Benefit ETF and the State-owned Enterprise Mutual Benefit ETF linked fund are developed entirely by Guotai Fund Management Co., Ltd., and are not affiliated with the London Stock Exchange Group company and its affiliates (collectively referred to as “LSE Group”), nor are they sponsored, endorsed, sold, or promoted by them. FTSE Russell is one of the trademark names of a specific LSE Group company. LSE Group does not assume any responsibility for any person’s use of this fund or underlying data. If you need to purchase the relevant fund products, please read carefully the fund legal documents such as the fund contract, the prospectus, and the product information summary of this fund, and choose products whose risk level matches your risk tolerance. The fund involves risks; investment should be done with caution.

The management fee for the State-owned Enterprise Mutual Benefit ETF China Guotai is 0.25% per year, and the custody fee rate is 0.05% per year. The front-end subscription fee rates for this fund are as follows: for amounts below 500k yuan, the subscription fee rate is 0.08%; for amounts from (including) 500k yuan to below 1M yuan, the subscription fee rate is 0.05%; for amounts of (including) 1M yuan and above, charged per order, at 500 yuan per order. The Link A management fee rate is 0.15% per year, and the custody fee rate is 0.10% per year. The front-end subscription fee rates for this fund are as follows: for amounts below 500k yuan, the subscription fee rate is 1.00%; for amounts from (including) 500k yuan to below 1M yuan, the subscription fee rate is 0.60%; for amounts of (including) 1M yuan and above, charged per order, at 100 yuan per order. The redemption fee rates are as follows: if the holding period is less than 7 days, the redemption fee rate is 1.50%; if the holding period is 7 days (including) or more, the redemption fee rate is 0.00%. The Link C management fee rate is 0.15% per year, the custody fee rate is 0.10% per year, and the sales service fee is 0.20% per year. There is no subscription fee, and the redemption fee rates are as follows: if the holding period is less than 7 days, the redemption fee rate is 1.50%; if the holding period is 7 days (including) or more, the redemption fee rate is 0.00%.

The management fee for the Power Grid Equipment ETF China Guotai is 0.50% per year, and the custody fee rate is 0.10% per year. The front-end subscription fee rates for this fund are as follows: for amounts below 500k yuan, the subscription fee rate is 0.08%; for amounts from (including) 500k yuan to below 1M yuan, the subscription fee rate is 0.05%; for amounts of (including) 1M yuan and above, charged per order, at 100 yuan per order. The Link A management fee rate is 0.50% per year, and the custody fee rate is 0.10% per year. The front-end subscription fee rates for this fund are as follows: for amounts below 500k yuan, the subscription fee rate is 1.00%; for amounts from (including) 500k yuan to below 1M yuan, the subscription fee rate is 0.60%; for amounts of (including) 1M yuan and above, charged per order, at 100 yuan per order. The redemption fee rates are as follows: if the holding period is less than 7 days, the redemption fee rate is 1.50%; if the holding period is 7 days (including) or more, the redemption fee rate is 0.00%.

The Link C management fee rate is 0.50% per year, the custody fee rate is 0.10% per year, and the sales service fee is 0.20% per year. There is no subscription fee, and the redemption fee rates are as follows: if the holding period is less than 7 days, the redemption fee rate is 1.50%.

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Editor in charge: Guo Xutong