Likely supply disruptions lead to industrial metals rally

Likely supply disruptions lead to industrial metals rally ETF SecuritiesLikely supply disruptions lead to industrial metals rally

ETF Securities Weekly Flows Analysis – Likely supply disruptions lead to industrial metals rally

Highlight

  • Industrial metal basket ETPs see largest inflows since February as supply disruptions likely
  • Energy sector ETP flows continue to bifurcate – energy baskets attract inflows while crude oil ETPs suffer outflows
  • Investors appear to bet on a stronger Euro vis-à-vis the US Dollar

Industrial metal basket ETPs see largest inflows since February. Industrial metals gained a strong tail-wind last week, rising 2.9%, as trade-wars escalate. Inflows of US$46.1mn in to industrial metal ETPs followed. Trade restrictions will likely disrupt supply chains and increase the scarcity of many metals. Protectionist pressures initiated by the US -including imposing tariffs on EU, Canadian and Mexican steel and aluminium imports and a raft of tariffs on Chinese imports have been met by announcements of retaliation. This tit-for-tat ratcheting of a trade war may escalate further.

Most base metals are already in a supply deficit. Trade wars further complicates metal availability. In addition to trade wars, US sanctions placed on Oleg Deripaska, the largest shareholder of Rusal (the world’s largest aluminium producer), have led to tightness in aluminium. The world largest copper mine, Escondida, has resumed wage negotiation after postponing them last year. Last year the mine underwent a 43-day strike following the impasse in wage negotiations. Investors fear a déjà vu moment, as the unions have placed a very ambitious request forward. The closure of a large Indian smelter and US Dollar weakness have also contributed to copper rising to a 4 ½ -year high. Copper ETPs saw US$13.1mn of inflows last week, the highest since April 2018.

Energy sector ETP flows continue to bifurcate. Continuing a trend that started last week, long energy basket ETPs gained inflows of US$29.6mn, reaching the highest weekly inflows since December 2015. While long crude oil ETPs suffered further outflows of US$ 19.9mn, extending outflows for the ninth week in a row. Oil prices endured a lot of volatility last week. A higher than expected build in crude and product in the US sent prices lower. Added to that were reports that the US has asked Organization of Petroleum Producing Countries (OPEC) to raise production by 1 million barrels per day. With OPEC meeting later this month to discuss policy, we expect oil prices to remain volatile as the market tries to guess the what the 14-member cartel will do next. Oil prices started to rise again toward the end of the week as Iran signalled that it will restart nuclear enrichment as soon as the current nuclear deal collapses. Such cavalier discussion could repel the EU who have thus far been seeking to circumvent the US’s extraterritorial sanctions in favour of keeping trade open with Iran.


Investors appear to bet on a stronger Euro vis-à-vis the US Dollar.
Inflows into long Euro, short US Dollar ETPs rose to a four week high of US$9.4mn, reversing all of the prior week’s outflows from the pair. The Euro has seen a lot of volatility over the past few weeks during the sage of the formation of a new Italian government comprising of parties from the political extremes. Today, however, a commitment from the new Italian Finance Minister to the Euro and a pledge to avoid financial instability has offered the currency some support.


ETF investors feel the Italian equity shakeout is overdone.
We saw the third consecutive week of inflows into Italian equities, with US$3.9mn last week. Although Italian equities have been falling over the past month, the conciliatory words from the Italian Finance minister have led to a 2% rally in the Italian FTSE MIB today at the time of writing. ETF investors also sold US$3.7mn from broad European equity short ETPs last week, likely taking profits on a month of declining prices.

For more information contact:

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0)207 448 4330
E research@etfsecurities.com

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This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FCA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

ETF investors see silver lining in equity storm

ETF investors see silver lining in equity storm

ETF Securities – ETF investors see silver lining in equity storm

Highlights

  • A rout in cyclical markets set off a pronounced sell-off in commodities, including industrial metals, oil and gold.
  • ETF investors however, saw an opportunity to buy equities following price declines.
  • Record US oil production continues to weigh on oil.

Download the complete report (.pdf)

Industrial metals ETPs saw US$99.9mn outflows. Arguably the most cyclically exposed of the commodities – industrial metals – experienced the highest outflows in 10 weeks. An equity market sell-off dragged other cyclical assets lower. Most of the outflows were concentrated in broad baskets (-US$133.6mn) and copper (- US$26.3mn). However, there were inflows into nickel (US$61.3mn) and silver (US19.3mn), highlighting that some investors are tactically searching for opportunities after the price decline.

Inflows into European equity long ETFs rose to highest level since 2016, while outflows from short ETFs rose to highest since 2016. Investors bought US$15.9mn of European equity ETPs as European bourses saw a capitulation in prices. Meanwhile investors locked in their profits, selling US$9.9mn of European (mainly UK) short ETF positions. The trading patterns indicate that many ETP investors see the current equity market declines as transitory

Gold fails to attract haven asset seekers. Gold is often the first port of call in times of stress. Not last week apparently. Gold saw US$57.3mn of outflows as its price declined 1.3%. As US Treasury yields spiked to 2.86% at the end of the week from 2.71% at the beginning of the week and US dollar appreciated, gold prices fell. A second US government shutdown in the space of three weeks on Friday only offered temporary support to gold as a spending bill was signed and government re-opened in a matter of hours.

Oil ETPs saw a further US$29.7mn of outflows as US pumps out a record 10.25mn barrels per day. In the past 32 weeks there has only been one week of inflows into oil ETPs. In contrast to oil futures, which had recently seen speculative positioning rise to an all-time high, ETP investors had been selling into the price rally that started in June 2017 and ended in January 2018. With many ETP investors having accumulated positions during the prices declines from 2014, recent selling indicates profit taking. We had argued in that prices around US$70/bbl hit in January were not sustainable as US production would rise in response and suppress prices again. Oil rig counts in the US have risen for the past three weeks, oil production has risen for four consecutive weeks and crude inventory is rising once again. In fact US oil production rose to over 10.25mn barrel per day last week (the highest since weekly records began in 1983 and higher than the monthly data that began in 1920).

Important Information

General

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).
The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FCA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

 

Millenials har tagit de börshandlade fonderna till sitt hjärta

Millenials har tagit de börshandlade fonderna till sitt hjärta

Att Millenials har tagit de börshandlade fonderna till sitt hjärta är en sak, viktigare är att de har tagit ETFer till sin plånbok och använder sig av dessa. Millenials säger att en ETF är en lättanvänd, kostnadseffektiv och transparant investeringsform. Av denna anledning har ETFer i USA kommit att bli ett mycket populärt sätt att fånga avkastningskurvan i USA. Om trenden fortsätter kan ETFer stå inför en kraftfull tillväxt de kommande åren.

Den senaste ETF Investor Study som genomfördes av Charles Schwab & Co. visade att i genomsnitt att över en fjärdedel av deras portföljer, eller 27 %, för närvarande allokeras till en ETF, jämfört med 16 % år 2012. 42 procent av investerarna fortsätter att anta ETFer kommer att bli deras primära investeringsverktyg i framtiden jämfört med 28 % år 2016. Om fem år skulle börshandlade fonder alltså kunna utgöra 33 % av deras portföljer.

Attityderna har förändrats

Det har varit fascinerande att se hur attityder mot ETFer utvecklats under de sju år som vi har gjort denna undersökningsäger Charles Schwab i en kommentar ”Varje år säger investerare att ETFer spelar en ännu större roll i sina portföljer, och alla tecken pekar på att tillväxten fortsätter. När investerare har blivit mer bekanta med börshandlade fonders mångsidighet har deras självförtroende ökat. Hälften av ETF-investerare anser att deras förståelse av ETF på mellannivå är nästan alla (93 %) nu fullt övertygade om deras förmåga att välja en ETF som är rätt för deras investeringsmål.

Fördelat på generationerna står Millennials utbland olika investerare demografiskt. Cirka 56 % av millennierna säger ETFer är deras typ av investeringsverktyg, däremot är 44 % av de så kallade Generation Xers väljer en ETF och endast 30 % av Boomers vill ha en börshandlad fond.

Millennials är också mer benägna att satsa mer pengar på ETF. 60 procent säger att de kommer att öka sin ETF-exponering nästa år jämfört med 48% av Gen X och 29% av Boomers.

Bland de främsta orsakerna är att Millennials anser att börshandlade fonder kan hjälpa till att nå långsiktiga mål som att bygga rikedom och spara för pensionering. Millennials är mer benägna att överväga att inneha endast ETFer istället för att bara investera i enskilda aktier.

Millennials fortsätter att leda racet när det gäller ETF-adoption. Millennials har vuxit upp med ETFer, och på grund av deras förtrogenhet verkar de vara mer bekväma än andra generationer, för att omfamna dem som deras investeringsverktyg av val – och njuta av fördelarna med låga kostnader, skatteeffektivitet och öppenhet.

Socialt ansvarsfulla investeringar

Schwab försökte också att mäta svaren på socialt ansvarsfulla investeringar som de som täcker principer för miljö, samhälle och styrning, som nyligen har dragit ökat i betydelse. Medan endast en av 10 ETF-investerare har en socialt ansvarsfull investering, finns det ett ökat intresse för detta segment. 46 procent av alla ETF-investerare anser att det är viktigt att investera i socialt ansvariga aktier eftersom strategierna stämmer överens med deras övertygelse och 51 procent skulle investera mer om SRI-produktutbildning erbjöds.

Millennials, återigen, förblir i spetsen av SRI ETF adoption. 48 % av Millennials söker aktivt efter investeringar som använder SRI-strategier, jämfört med 32 % av Gen X och 14 % av Boomers. Millennials ser också socialt ansvarsfulla företag som ett sätt att anpassa sig till sina övertygelser samtidigt som de hjälper dem att nå långsiktiga mål.