Where are the structural opportunities in the new era? (Part 1) [Dapeng Talks, Lecture 1]

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Guest Teacher Introduction for this Column:

Hello everyone, this is the first episode of our new column. Today, instead of discussing the ups and downs of a single market, we want to talk with you about two core questions: how to understand the current economic cycle, and how to capture structural opportunities that can transcend cycles.

Now that AI has completely changed the way we work, the paradigm of investment research is also undergoing drastic changes. We have made a brand new attempt: making each episode into an interactive web page, making it easy for everyone to revisit the key points at any time. More importantly, these contents can be packaged as knowledge files in the future, for your AI investment assistants to learn.

Of course, technology is just a tool. Having done investment for so many years, my deepest insight is that a good system is far more important than a few geniuses. We are not pursuing to be the forever-correct “stock gods”, but hope to build a research community with you that constantly self-reflects and improves.

In this episode, we’ll start from the foundation of economic cycle research—the “anchors”: interest rates and exchange rates. Then we’ll talk about what I think will be the most important structural opportunity in the next 10 to 15 years: the end of the global low-inflation era, and the coming wave of resource nationalism.

The New Paradigm of Investment Research in the Age of AI

First, let me share with you our column’s brand new presentation method. From now on, each episode will be posted on an independent web page, launched on our own platform and also synchronized on Wallstreetcn. You can review the full content on the web at any time and directly click to see key data and charts mentioned in the show.

I am very convinced that in the next few years, the traditional way of presenting research conclusions in PDF or PPT will definitely be thoroughly changed. Because now reports are written for people, but in the future, collaboration between humans and machines will become closer. So we will make each episode into a format that can be encapsulated, maybe a knowledge base or a compressed file. You can directly import these files into your AI tools and let your investment assistant learn and digest.

Of course, we always believe that the final decision-making authority must be in the hands of people. The web version is the "manual" option reserved for everyone. You can always come back here to read our analysis and logic word by word. Once the web page is officially online, we will send out the link as soon as possible.

Seeing the Truth of Research from Sports: Systems Matter More Than Individuals

Before talking about the economy, I want to share two things that seem irrelevant but had a big impact on me. The two things I spent the most time on in this life: football and DOTA2. Unfortunately, in both, we once stood on the top but could not continue the glory.

After 2002, Chinese football never made it into the World Cup again, not even with expansion to 48 teams in 2026. In DOTA2, after TI6, we never won the world championship again. Many people reflect, where is the real problem? Actually, it's not about a lack of talent. Fan Zhiyi and Sun Jihai were both world-class players; the TI6 Wings team was undoubtedly a team of geniuses. But without a large enough base and sound youth training, even the brightest talent is just a flash in the pan.

The same logic applies to investing and research. What matters is the quality of your system. There’s no need to artificially create a few omniscient "legendary figures"; more important is establishing an open, candid atmosphere for discussion. In this column, we will often review what we've gotten wrong and where we've made mistakes. Frankly, I’ve never seen a 100% winning investor in my life. Everyone likes to talk about where they were right and hates mentioning mistakes—it's human nature. But I always believe that summarizing your mistakes is the fastest way to improve.

We have two goals for this column: First, we hope more friends will join in for discussion and exchange; second, we don't want to shape an image of being "always correct". Investment and research are inherently full of uncertainty. Sometimes your logic is completely right but the outcome is wrong—that's totally normal. As long as you don't make mistakes on the core structural issues, that is enough.

The Core of Economic Cycle Research: Interest Rates and Exchange Rates

Having talked that through, let’s get to the main topic. The content of this column is divided into two sections: the first is studying cyclical issues of the economy, judging whether the current economy is in recovery, overheating, stagflation, or recession; the second, and more important, is researching structural opportunities in the economy. We'll start with cyclical issues.

I must give special thanks to my former boss, Mr. Gao from Zijin. He taught me the most important sentence in macro research: interest rates and exchange rates are the core of all problems. For a long period, I was obsessed with various complex cycle theories, unable to understand this. I asked many industry peers, and the best explanation was: interest rates and exchange rates are the world’s largest and most fully traded markets. Their trends are the result of all global investors voting with real money—there’s almost no “glitch” or noise.

Small cap stocks may be manipulated by big players; individual commodities may be speculated on; but interest rates and exchange rates won’t. The rise and fall of the U.S. dollar and changes in U.S. Treasury yields have an enormous impact on global liquidity—it cannot be overstated. Therefore, in all our discussions about cycles, besides the traditional four phases (recovery, overheating, stagflation, depression), interest rates and exchange rates are always the most core considerations.

Our analysis method is simple, using the most basic moving average system. We see whether the 10-year U.S. Treasury yield is above or below its 200-day average, then convert it into a basket-of-currencies Dollar Index to broadly judge current market strength. Calculating the Dollar Index with different weights yields similar results.

As of the second week of June 2026, our judgment is: there is no clear downward driver for the dollar or U.S. Treasury yields. Looking back at recent years: late 2023 into early 2024, Treasury yields fell from highs and risk appetite increased; May to September 2024, rates fell again, and the market performed well; but from March 2026, rates began rising again, and capital markets entered a weaker stage.

At the moment, both interest rates and exchange rates are oscillating in a range, lacking a clear trend. Maybe in another two weeks or a month, the trend will become clearer—then we'll analyze it in detail for you again.

More Important Than Cycles: Structural Opportunities

The above was all about short-term cyclical issues, but what we really want to share in this column are structural opportunities in the economy. This is something I learned from another teacher, Paul McCulley, former chief economist and one of the founders of PIMCO.

He was retired by then and never prepared for lectures. He just followed the rhythm of the Federal Reserve FOMC meetings. When the Fed met in the U.S. afternoon, we would watch together in our own afternoon. On the weekend, he'd invite students to the café near his house and chat all afternoon. I was lucky to have had the chance to ask him questions when he’d just retired.

When I showed him my pile of research on economic cycles, he directly said I’d missed the point. He said, since 1986, during his 40 years of watching the Fed (from 1986 to 2026), there were only four truly major opportunities: the collapse of the Soviet Union, Japan's 1990s recession, China’s super cycle post-2001, and the U.S.'s quantitative easing after 2008.

He said, if you focus too much on short-term cyclical fluctuations, you might actually miss the opportunities that really change your wealth. If in 2018 you kept fussing over the Fed raising or lowering rates, you might have missed the explosive growth of new energy vehicles. If after 2023 you're still debating when the economy will recover, you might miss the AI capital expenditure boom.

So what exactly are cyclical and structural opportunities?

Cyclical opportunities relate to short-term economic fluctuations, such as central bank interest rate cycles or inventory cycles, which last maybe a few months to a year or two. Structural opportunities involve longer-term, more fundamental changes: a country's industrialization, waves of globalization, long-term restructuring of balance sheets—lasting five, ten, or even more years.

For the past 40 years, the continuous global decline in interest rates was the biggest structural opportunity. In the next 10 years, breakthroughs in AI and the end of the global low-inflation era will likely be the next major batch of structural opportunities.

For cyclical opportunities, you can check data, charts, and discuss with industry peers. For structural ones, on-the-ground research is essential. Because truly structural opportunities are broad social consensuses, they transcend business cycles. For example, during China’s real estate supercycle, no matter how the economy did, people's enthusiasm for buying homes never changed; during U.S. QE, no matter inflation was high or low, financial assets were always the favorite.

So this column, besides bi-weekly updates on short-term market trends, will focus more on on-the-ground interviews and research. We'll invite guests from different fields to share the fundamental structural changes happening in the world right now.

The First Structural Opportunity: Resource Nationalism and the Reshaping of Global Order

AI is, of course, the biggest structural change of our era. Many parts of the web page you see today were completed with AI assistance. But today, I want to discuss another trend I think is equally important: the rise of resource nationalism.

I firmly believe that the era of global low inflation is over. The age where everyone cooperated to suppress inflation may be gone for good. In the future, we face a world with persistent supply constraints but ever-growing industrial demand. Commodities are in for a long-term revaluation, driven above all by more resource-rich countries adopting resource nationalism policies.

Let’s start with Indonesia. I just returned from Jakarta two weeks ago after attending a Shanghai Metals Market (SMM) conference and meeting with local government officials and businesses. Indonesia's fiscal situation isn't particularly good, with a deficit-to-GDP ratio of about 3%. As an Islamic country and with painful memories from the 1998 Asian Financial Crisis, Indonesia is very fiscally conservative. Their solution to fiscal pressures is direct: sell their resources at a higher price.

Everyone knows that long-term economic development is the key to stable tax revenue. But for a politician, their term is limited—just about two years to the next election—so they can't wait for economic returns from nurturing industries several years down the line. Hence, they want to redefine the rules and sell resources at a better price in the short term instead.

This involves a core contradiction: The United Nations Charter explicitly gives every nation full sovereignty over its own natural resources—this was the result of the anti-colonialist movement after WWII. The looting of Congo by Belgium, Indonesia by the Dutch, and Malaysia by the British has made all newly independent countries value resource sovereignty highly. But WTO rules also require countries to not set trade barriers and keep markets open.

In the past, this contradiction was covered by the U.S.-led global order. WTO itself has no enforcement power; it can neither send troops nor sanction any nation. It “works” only because the U.S. uses its economic and diplomatic strength to punish countries that violate WTO rules. Frankly, the WTO is just “borrowing the tiger’s might”—using America’s power.

But now the situation has changed. When the U.S. no longer fully supports globalization, the WTO naturally becomes an empty shell. At the conference, Indonesian Deputy Foreign Minister Arif said calmly, many WTO rules conflict with the UN Charter. The implication: Indonesia will no longer unconditionally follow unfavorable global trade rules.

Indonesian officials told us they consider nickel, bauxite, coal, and palm oil their “new era spices”. Historically, Indonesia’s Maluku Islands were famous for cloves, and Indonesians have long known how to use scarce resources to gain higher profits. Their current method is the downstreaming strategy: restrict export of raw ores and require all miners in Indonesia to build local smelters, even battery plants.

Why are they doing it? Because, in the old global order, resource exporters were willing to sell cheaply for the safety of the free trade system: getting a stable supply of needed fertilizer, rice, and industrial goods. But as this order breaks down—exchange rates unstable, Strait of Hormuz sealed off and shortage of energy/raw materials—when the old system can't guarantee your basics, who will still sell their core resources cheaply?

Profit sharing in the industrial chain is always a dog-eat-dog business. In mining, government-corporate splits are always negotiated, never “moral”. When prices rise, governments want more—this is a global phenomenon. In the past, they'd care about WTO rules. Now, since WTO can't control anyone, this behavior will only increase.

At a geoeconomics conference in Washington in April, Georgetown and Johns Hopkins scholars concluded: in the past, countries participated in the global economy to maximize social welfare. Now, they participate to win more for themselves—even at their neighbors’ expense.

And, when a country controls over 60% of global production of something, it can change rules at will. The logic: if four players each hold 25% market share and you cut output, others will make up for it and you lose both share and profits. But if you control 60% and the remainder can't make up for your cut, prices rise and profit is much higher than your output loss.

Indonesia produces over half the world’s nickel, so it can manage prices. They think $16,000/ton is too cheap for nickel (local firms make no money), while $22,000 is too high (sparks competition in the Philippines, Australia). Their goal: keep it at $18,000–$20,000 and let more profit flow to local miners rather than overseas smelters.

More importantly, Indonesia is keenly aware of the “single buyer” risk. Currently, China’s stainless steel industry is almost Indonesia’s only big nickel buyer. So Indonesia is actively bringing in U.S. and European capital to create a more diversified downstream—this matches perfectly with America's push for diversified supply chains.

Indonesia’s geographical span is enormous—Sumatra in the west to Papua in the east is roughly 5,000 km, like China’s length east to west. Shanghai to Urumqi is 5+ hours flying; the same for Sumatra to Papua. Chinese nickel mines/smelters cluster on Sulawesi (“Big K” and “Small K” islands), while coal is more in Sumatra and Kalimantan.

But Indonesia’s policies have their problems—especially policy uncertainty, with rules changing often, making foreign investors cautious. For instance, according to SMM, profits for aluminum in Indonesia are now 36x that for ferronickel, but few dare invest big for fear the government will copy its nickel-tricks for aluminum next.

Even a local home improvement chain told us they were scoping possible aluminum projects. This country-wide fever for one industry shows both its profits and how strong the government’s policy drive is.

Indonesia’s thinking is clear: its nickel cost advantage may last about 10 years, maybe no more. So their goal is to keep as much value as possible at home in these 10 years. For them, how much you dig isn’t key; what matters is attracting investment, jobs, and tax revenue.

It's predictable: Indonesia’s era of big new nickel supply is over. In June 2026, many companies apply for new mining quotas; the government will issue new quotas in July. About quota policy, HPM guide prices, and high/low-grade ore division—we’ll explain in detail in the next episode.

But the major trend is clear: Indonesia wants commodity pricing power, to end the past era when local firms couldn’t make money. In future, not only nickel, but palm oil, coal, bauxite will see similar situations. Bauxite from Guinea, lithium from Chile, oil from the Middle East—more countries will go the way of resource nationalism. These changes will make global commodity supply tighter in the next 5 to 10 years and support strong commodity prices over the long-term.

That’s all for today. See you next time!

"Dapeng Says" — 2026 Full Year Column Plan

Risk Warning and DisclaimerThe market has risks, investment should be cautious. This article does not constitute individual investment advice and does not take into account the special investment goals, financial circumstances, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article fit their specific circumstances. If you make investments based on this, you do so at your own risk. ```