Green means go for industrial metals
ETF Securities Weekly Flows Analysis – Green means go for industrial metals
- Industrial metal ETPs recorded the largest weekly inflows since summer 2014.
- Robotic ETP continues to record inflows on better-than-expected earnings seasons
- Gold and oil ETPs recorded outflows as price continue to rise.
- Inflows into silver ETPs, benefitting from the attractiveness of industrially based metals.
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Robotic ETP continues to see inflows on a better-than-expected earnings season. Last week saw US$49mn inflow into the robotic ETP, bringing the fund’s asset under management above US$1bn. 92% of the constituents of the Robotic index have reported earnings as of last week among which 62% are beating expectations, representing an earnings beat margin of 12%. The Robotic index price-to-earnings ratio is currently 29.8x above its historical average. However, the index continues to trade at a discount to the MSCI World IT index.
Gold and oil ETPs recorded outflows on profit-taking as prices continue to rise against market expectations. Last week saw oil and gold ETPs recording outflows of US$21mn and US$31mn, respectively as oil prices reached new highs. Meanwhile, the gold price closes in on the US$1,300/oz. mark, despite some potential downward pressure ahead of the Fed December rate hike. Despite US oil production now being above its 2015 peak, WTI rallied by 4.2% last week, potentially on larger-than-expected decline in US oil inventories, while Brent rose by 1.8%, reducing its premium to WTI to US$4.9/bbl. Brent prices underperformed as Saudi Arabia exports increased in November compared to the September and estimated October levels, despite cuts in oil allocations of 560,000 barrels per day in November. Long WTI ETPs saw US$14.5mn outflows while US$5.9mn were withdrawn from long Brent ETPs.
Silver ETPs recorded the largest weekly inflows since September, benefitting from the attractiveness of industrial metals. Around 8% of silver consumption is used in the making of photovoltaic cells. This share is likely to increase in the next decade as the world makes the transition to a low-carbon economy. Silver, among other base metals, is likely to benefit from the demand boost. Last week saw US$8.6mn into silver ETPs despite little movement in price.
Edith Southammakosane, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.
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