Heavy Assets Rise! Electricity Surges Over 13% This Year, This Investment Strategy Goes Viral

21st Century Business Herald Reporter Yi Yanjun

In the past two months, HALO trading, centered around the keywords “Heavy Assets” and “Low Obsolescence,” has become popular on Wall Street.

Due to concerns that “rapid AI technological iteration will disrupt the light-asset model,” funds have shifted from software sectors to high-threshold, demand-rigid fields like energy and utilities.

In the A-share market, since the beginning of the year, sectors such as oil and petrochemicals, non-ferrous metals, basic chemicals, and electricity have performed well.

“High barriers, high dividends, and low capital expenditure leading companies are highly aligned with the HALO logic in A-shares,” said Chen Xianshun, Chief Equity Strategist at Bosera Fund, to the 21st Century Business Herald. He suggests focusing on three points for current deployment: prefer leading companies with high barriers, high dividends, and low capital expenditure; avoid false heavy assets and cyclical high points; control position sizes as a hedge, avoid chasing highs driven by market sentiment; closely monitor interest rates, policy pricing, and supply-demand patterns, using cash flow and dividends as core valuation anchors, and downplay short-term thematic volatility.

From a strategic perspective, institutional analysis indicates that HALO trading essentially involves a definitive re-pricing of real hard assets, centered on heavy asset barriers, low technological obsolescence, and perpetual cash flow, making it a long-term allocation strategy rather than a short-term theme trade.

Additionally, some institutions believe that China, with its complete manufacturing system, large infrastructure stock, and leading resource capacity layout, may hold unique value under the HALO investment paradigm.

By early 2026, international investment banks like Goldman Sachs and Morgan Stanley have promoted HALO (Heavy Assets, Low Obsolescence) investment as a core strategy.

The core of HALO trading is: “In an environment of uncertainty brought by AI technology, seek assets with low risk of being replaced by AI, resistant to technological shocks, and capable of long-term stability. The investment logic shifts from chasing growth to focusing on certainty and scarcity,” noted the China International Capital Corporation (CICC) strategy research team.

At the industry level, HALO assets are mostly located upstream in the supply chain, covering heavy asset industries that provide energy, raw materials, logistics, and other basic services. These industries require massive upfront capital expenditure, have high entry barriers, and are characterized by “high replacement costs, high construction barriers, and hard-to-disrupt physical hard assets.”

In the US stock market, since 2026, there has been a clear trend of funds migrating toward heavy asset sectors.

According to institutional data, since the beginning of the year, the US S&P 500 energy sector has risen over 25%, leading the market; industrials, materials, and utilities have also significantly outperformed the index. Meanwhile, the software sector has fallen over 30% from its high.

Wanguo Fund pointed out that the “counter-narrative” in the AI era—HALO assets—is experiencing a systematic valuation re-assessment opportunity.

“The rise of HALO trading mainly stems from market concerns that ‘rapid AI technological progress will threaten the business models of intelligence-intensive companies, represented by software firms.’ Compared to this, HALO assets with heavy assets and low obsolescence risk may benefit from more predictable future profits, attracting market capital,” said Zheng Si’en, Senior Researcher at the Macroeconomic Research Group of China Europe Fund.

Further analysis by CITIC Prudential Fund suggests that the rise of HALO trading reflects a re-pricing of the certainty and scarcity of AI.

He explained that first, panic about AI disrupting light-asset industries has driven funds toward entities with physical asset barriers and slow technological iteration (such as power grids, oil and gas, non-ferrous metals). Second, AI development creates rigid demand for physical assets, especially heavy infrastructure.

Third, the restructuring of global supply chains and geopolitical risk premiums have increased the scarcity of key resources like oil, gas, and minerals. Fourth, in a high-interest-rate environment, cash flow preferences have shifted, and under the trend of global funds flowing into light-tech stocks, investments in physical assets like mines, power grids, and refineries have been insufficient. Companies with existing assets that generate abundant cash flow and high dividends, such as HALO firms, are favored.

Some institutions even compare HALO strategies to “physical foundations” and “safe harbors” in the AI era. Does this mean that the long-term logic behind the popularity of HALO trading is justified?

CITIC Prudential believes that HALO trading has the potential to become a mainstream strategy, with the core logic being the irreplaceability of “physical assets” in the AI era, balancing long-term defensiveness and offensive capabilities. HALO assets can withstand technological cycles and, with AI industry growth, evolve into assets with both value and growth attributes.

In Chen Xianshun’s view, the essence of HALO trading is a re-pricing of real hard assets under high interest rates and AI-driven restructuring cycles, focusing on barriers, low obsolescence, and perpetual cash flow. It is a long-term allocation strategy rather than a short-term theme.

Will the HALO trading model promoted by top international banks find room for development in the A-share market?

Looking at the performance of related assets in the A-share market, Wind data shows that as of March 10, the indices for Shenwan Petrochemicals, Coal, Non-ferrous Metals, Basic Chemicals, Electrical Equipment, and Utilities have all gained over 10% since the start of the year, leading the Shenwan first-level industry indices.

Specifically, the gains for Shenwan Petrochemicals, Coal, and Non-ferrous Metals are 22.82%, 19.59%, and 18.55%, respectively. Basic Chemicals and Electrical Equipment increased by 16.96% and 13.53%.

Zheng Si’en believes that, domestically, the risk of AI technology disrupting traditional intelligence-intensive enterprises also exists, so the HALO trading pattern observed overseas may also be reflected in the Chinese market.

He noted that HALO assets have two core features: heavy assets and low obsolescence. In the A-share market, assets meeting these criteria are mainly concentrated in upstream resource extraction, midstream chemicals, metal smelting, and utilities.

Meanwhile, the aforementioned CITIC Prudential Fund expert also stated that HALO strategies are suitable for the A-share market, which has a reserve of leading HALO assets such as manufacturing, energy, and non-ferrous metals.

He analyzed that these can be divided into four major sectors: first, energy and power, driven by the surge in AI data center energy consumption, with rigid demand in sectors like power grids, oil, nuclear, and hydropower; second, resources and materials with monopoly supply, driven by increased demand for basic materials due to AI and energy transition (such as copper, aluminum, rare earths). Upstream resources tend to have monopoly status, slow technological iteration, and include sectors like non-ferrous metals, coal, and basic chemicals.

Third, infrastructure and utilities, characterized by non-replicable rights of way and municipal needs, with stable demand, strong inflation resistance, including sectors like rail transport, water services, and utilities. Fourth, communication infrastructure, driven by 5G, 6G, and data transmission nodes, adopting a “rental” model with rigid demand, including sectors like telecom towers and data center infrastructure.

Additionally, based on the relationship with AI development, Qianhai Open Source Fund divides HALO assets into “defensive” and “offensive” types. The core value of defensive HALO assets lies in “being hard to disrupt,” including: energy, basic materials, utilities, transportation, defense, and military industries. When tech stocks are overvalued or market volatility intensifies, funds tend to flow into these “safe havens.”

Offensive HALO assets, whose core value is “demand increases as AI develops,” are mainly in: industrial metals, electrical equipment and grids, oil transportation, and logistics. Qianhai Open Source Fund believes these assets combine the “hard asset” properties of HALO with the benefits of AI growth, making them a “both offensive and defensive” choice.

From a global physical resource demand perspective, Wanguo Fund believes that Chinese assets may hold unique value under the HALO investment paradigm.

“Looking ahead, the restructuring of global manufacturing capacity, expansion of AI industries, and increased global capital expenditure driven by demand will create long-term demand for physical consumption. China, with its complete manufacturing system, large infrastructure stock, and leading resource capacity layout, will stand out in the HALO narrative,” the firm stated.

From an investment perspective, Wanguo Fund reminds that the “counter-narrative” of HALO is not opposition to the AI revolution but hedging and coexisting with its social and economic impacts. Essentially, it involves anchoring investments in areas with resilience against disruption or with spillover expansion opportunities amid technological “creative destruction.”

Although HALO assets are experiencing valuation re-assessment, risks must be managed carefully.

CITIC Prudential Fund suggests that investing in HALO assets requires avoiding “blind following,” and focusing on valuation rationality, industry prosperity, and policy guidance.

Specifically, first, considering A-share characteristics, avoid simply copying US logic; adjust deployment based on domestic policy regulation and domestic demand recovery. Second, monitor sector volatility risks, avoid chasing highs; since many HALO assets are cyclical, avoid high-level chasing. Third, maintain balanced allocation to prevent over-concentration in HALO assets. Fourth, pay attention to policy and geopolitical risks, as assets like energy and non-ferrous metals are sensitive to policies (such as environmental and energy policies) and geopolitical conflicts; track policy trends and geopolitical developments, and adjust positions timely.

Zheng Si’en reminds that focusing on whether assets have long-term low obsolescence features is crucial when deploying HALO assets. For example, traditional coal-fired power units, despite being heavy assets, face challenges due to ongoing advances in renewable energy and stricter global carbon emission standards, which may pose long-term risks.

Wanguo Fund also notes that some bulk commodities and intermediate products have already experienced significant price increases, and high prices may be accompanied by volatility. It is important to monitor the resonance between price prosperity and performance realization. Be aware of long-term technological disruptions (“gray rhinos”) and the potential impact of long-term technological upgrades on the underlying logic of some HALO assets.

Additionally, Chen Xianshun warns that structural differentiation in the economy and expectations of interest rate cycle shifts have made HALO trading highly discussed. It may not dominate the entire market but can be considered a standard defensive core holding in institutional portfolios.

“Domestic A-shares are naturally compatible, with a high proportion of实体资产, stable cash flows from state-owned enterprises, and policy support for硬科技, aligning closely with HALO logic. Current deployment can focus on three points: prioritize leading companies with high barriers, high dividends, and low capital expenditure; avoid false heavy assets and cyclical high targets; control positions as a hedge, avoid chasing highs driven by sentiment; closely monitor interest rates, policy pricing, and supply-demand patterns, using cash flow and dividends as valuation anchors, and downplay short-term theme volatility,” Chen Xianshun concludes.