Adjust ratings of basic materials equities to reflect less attractive risk/reward We believe the risk/reward for most basic materials stocks has become less attractive after rallying more than 30% YTD and over 100% LTM. Recent positive catalysts (including strong demand/price recoveries ex-China and production curtailments in China triggered by carbon-neutral ambitions) are well played out. We fail to envision the next positive catalysts that could stretch valuations further. As a result, we turn more cautious on stocks with the highest direct exposure to commodity prices: Jiangxi Copper (from Buy to Sell), and Chalco (from Buy to Sell). We also downgrade Shenhua from Buy to Neutral on the back of lackluster earnings growth. Our top picks are companies with good volume growth such as Zijin or still with mismatches for valuations/fundamentals, such as China Hongqiao and Angang.