Military upgrade brings marginal increments, non-ferrous metal ETF funds pull back, relevant indices may be positioned on dips

On March 18, the three major indices collectively strengthened in the afternoon, and the decline in thematic sectors such as gold and non-ferrous metals narrowed. As of 14:20, the Gold ETF Huaxia (518850) fell 0.32%, the Gold Stock ETF (159562) fell 0.27%, and the Non-Ferrous Metal ETF (516650) fell 0.98%.

According to SIPRI data, global military spending reached $2.718 trillion in 2024, marking ten consecutive years of growth with a total increase of about 37% over the decade; it increased by 9.4% year-on-year in 2024, one of the steepest annual increases since the end of the Cold War.

Guotai Junan analysis indicates that against the backdrop of global military upgrades, in the medium to long term, demand for copper and aluminum will be supported by military and infrastructure needs, while battery metals like nickel will benefit from the new energy transition. The certainty and higher growth rate of demand will make them the core focus of metal demand expansion.

The Non-Ferrous Metal ETF (516650) tracks the CSI Sub-Industry Non-Ferrous Metals Index, focusing on industrial metals such as gold, copper, and aluminum, as well as small metals like rare earths, tungsten, and molybdenum. Driven by the AI wave and the re-industrialization wave, demand for non-ferrous metals like copper and aluminum is expanding, while supply-side growth is limited. Under supply and demand mismatch, the price center for copper and aluminum is expected to rise, making them worth attention. It may be advisable to gradually position on dips.