The HALO trading strategy is sweeping through global capital markets, with hard assets becoming a new favorite for capital seeking safe havens. Since 2026, global markets have witnessed a surge in "hard asset" investments. The HALO strategy—focusing on Heavy Assets with Low Obsolescence—has rapidly spread from Wall Street to A-shares, emerging as one of the most closely watched trading approaches.
On March 2, escalating tensions between the U.S. and Iran triggered significant volatility in global energy and resource prices. International oil prices surged by over 10% at the open, while spot gold broke through $5,400 per ounce, further fueling enthusiasm for HALO assets and bringing the strategy's popularity to a peak.
HALO, an acronym for Heavy Assets, Low Obsolescence, is an investment strategy that has gained traction in the AI era. Its core principle is to identify and invest in physical assets with high barriers to entry and low susceptibility to technological disruption, thereby hedging against uncertainties brought by artificial intelligence.
In simple terms, the strategy involves going long on heavy assets that are difficult for AI to replace and that AI itself relies on, while shorting light assets that are easily disrupted by AI.
Promoted early in 2026 by top-tier international investment banks such as Goldman Sachs and Morgan Stanley, the HALO strategy quickly became a focal point for capital allocation globally. Morgan Stanley noted that market fears over AI's disruption of traditional industries may have peaked. For investors still concerned about AI's ongoing impact, physical assets with high entry barriers and low obsolescence represent an optimal hedging strategy.
Based on this logic, Morgan Stanley constructed a HALO asset basket, focusing on seven structural pillars: materials, utilities, railways, pipelines, waste management, defense, and signal towers. Data shows that over the past year, Morgan Stanley’s HALO basket rose by 28%, while a basket of stocks deemed vulnerable to AI disruption fell by 43%.
In a detailed report released on February 24, Goldman Sachs highlighted that markets are undergoing a "scarcity repricing," shifting from narratives around scalable light assets to tangible, hard-to-replace production capacity and networks. Amid rising interest rates, geopolitical fragmentation, and soaring AI-related capital expenditures, physical production capacity has become a scarce resource.
Goldman analysts emphasized that markets are now rewarding production capacity, networks, infrastructure, and engineering complexity—assets that are costly to replicate and less prone to technological obsolescence. Key beneficiaries include utilities, basic resources, energy, and transportation infrastructure. According to Goldman Sachs, since early 2025, its heavy asset portfolio has outperformed its light asset portfolio by 35%.
This trend has quickly spread to the A-share market, driving strong performance in related sectors. Data from Choice shows that over the past week, oil and petrochemicals surged by 13.66%, while non-ferrous metals rose by 13.42%. Steel, coal, and basic chemicals all gained more than 7%, with defense and utilities also among the top performers.
Domestic securities firms have quickly followed with analysis, releasing numerous reports interpreting the HALO strategy’s investment logic and opportunities in A-shares. On March 2, Zhao Gege, chief macro analyst at Everbright Securities, noted that while short-term fears over AI disruption may have peaked, enthusiasm for HALO trading remains strong. In A-shares, the strategy reflects a repricing of scarce assets. China’s comprehensive supply chain system and global leadership in sectors like new energy, power equipment, strategic metals, chemical materials, and shipbuilding position it as a source of hard assets in the AI era. With industrial upgrading and consolidation, these sectors may see systematic revaluation.
Lu Zhe, chief economist at Soochow Securities, pointed out that flaws in the AI narrative are increasingly being highlighted. Although long-term easing trends are clear, short-term market sentiment favors HALO trading. He suggested that in the near term, upstream and midstream sectors such as oil and gas, non-ferrous metals, chemicals, and utilities may lead the market. However, once further monetary easing is confirmed, markets may shift back to AI and emerging industries, awaiting opportunities in AI applications, robotics, and commercial aerospace.
Mou Yiling, chief strategist at Sinolink Securities, further emphasized that global investors may find that the HALO assets they seek are widely distributed in Chinese markets. The productive capacity of Chinese assets holds irreplaceable value, and a revaluation of Chinese manufacturing assets is already underway, supported by returning capital and recovering domestic demand.
He recommended focusing on four areas: first, assets resilient to AI disruption that also benefit from AI development and increased government focus on resources—such as copper, aluminum, tin, crude oil, oil shipping, rare earths, and gold; second, Chinese equipment export chains with global competitive advantages and confirmed cyclical bottoms—including power grid equipment, energy storage, engineering machinery, and wafer manufacturing—as well as domestic manufacturing recovery plays like petrochemicals, printing and dyeing, coal chemicals, pesticides, polyurethanes, and titanium dioxide; third, consumption recovery sectors benefiting from returning capital, eased balance sheet pressures, and rising inbound travel—such as aviation, duty-free, hotels, and food and beverages; and fourth, non-bank financials poised to gain from capital market expansion and stabilizing long-term asset returns.