TAARSS says prefer Asia Pac and Europe ex EUR countries in June Tactical Asset Allocation Relative Strength Signal (TAARSS) Monthly Update
Top recommendations for June: Hong Kong, European (non-EUR), Chinese and Indian equities, and EM Debt.
Market review
May was an overall weak month for the markets; Global equities (ACWI) were flat, while US Bonds (AGG) and Commodities (DBC) retreated by 0.44% and 3.17%, respectively.
Monthly TAARSS rotations were mixed in May. Most equity strategies underperformed their benchmarks, while non-equity strategies outperformed.
Tactical positioning for June 2015 based on TAARSS
This month in global equity markets prefer Intl DM and EM, and stay neutral to the US. Region wise prefer Asia Pacific and Europe, with neutral North American exposure, while staying away from Latin America. In US equities we don’t see much differentiation therefore we recommend a broad approach. Sector wise we see weakness across the board, but we expect Technology, Consumer Discretionary, and Health Care to be more resilient. In Intl DM countries prefer Hong Kong, Japan, and non-EUR countries such as Switzerland and the UK. Within EM countries, we recommend a country approach focusing on India, and China. In Fixed Income we prefer Credit over Rates, particularly EM debt. Within commodities, we saw some support in diversified broad exposure. See Figure 13 and Figure 14 for full allocation details for the month of June.
Vinnare och förlorare ETF-marknaden vecka 24 2015. Tillhör Du dem som anser att det går för långsamt med fonder? Med rätt börshandlad fond kan det gå snabbt, nedan har vi listat Vinnare och förlorare ETFer vecka 24 2015 på den amerikanska marknaden. Observera att i sammanställningen inte ingår några så kallade hävstångs-ETFer.
Förra helgens OPEC-möte har gett effekt på energipriserna, både oljan och naturgasen gynnades och steg när det visade sig att OPEC valde att inte öka sina produktionskvoter vilket många hade befarat. Istället valde OPEC att låta produktionskvoterna ligga fast. Inte mindre än tre av de fem bästa börshandlade fonderna denna vecka är sådana som replikerar utvecklingen av olja och naturgas.
Notabelt är att detta även styrde vilka ETFer som har gått sämst, både uran och kol har gått sämre, då detta är energikällor där efterfrågan, och därmed också priset, styrs av pris och tillgång på olja. Dessa råvaror är helt enkelt substitut till olja som en energikälla.
Positiva ekonomiska data inte längre ett lyft för Indien
Positiva ekonomiska data inte längre ett lyft för Indien Den indiska aktiemarknaden och de börshandlade fonder som replikerar utvecklingen av denna marknad har varit bland de bättre emerging markets under 2015. Indiens oförmåga att upprätthålla ett positivt momentum i den ekonomiska fundamentan väcker emellertid frågetecken.
Under det senaste året har WisdomTree India Earnings Fund (NYSEArca: EPI) stigit med mer än 30 procent, iShares India 50 ETF (NasdaqGM: INDY) med nästan lika mycket och PowerShares India Portfolio (NYSEArca: PIN) med cirka 29 procent. Under den senaste månaden har vi emellertid sett hur dessa har backat, EPI med 3,8 procent, INDY med lika mycket och PIN med 1,3 procent.
På grund av den senaste tidens svaghet är den amerikanska investmentbanken JP Morgan bekymrade över denna emerging market, argumentet är att Indiens aktiemarknad inte kunnat försvara sina senaste toppar trots allt fler positiva nyheter. Ett exempel på detta är när Reserve Bank of India tidigare denna månad överraskade marknaderna med att sänka räntorna med 0,25 procent. Den indiska börsen backade på detta besked.
Ett annat exempel är det reformförslag som premiärminister Narendra Modi lade fram den 12 mars vilket tillåter utlänningar att investera upp till 49 procent i indiska försäkringsbolag. Tidigare låg ägandenivån på maximalt 26 procent. För två veckor sedan godkände Indiens parlament en gruv- och kolreform. Följaktligen kan den senaste tidens kursfall bero på vinsthemtagningar och marknadsomvärdering baserat på att indiska aktier ser dyra utan ytterligare resultatstöd.
För närvarande handlas MSCI India till 17,8 gånger kommande resultat, eller 26 procent över sitt långsiktiga genomsnitt. Tittar vi på de ETFer som replikerar Indien så handlas EPI till ett p/e tal om 16,0 INDY till ett p/e tal om 20,8 P / E och PIN till ett p/e tal. S & P 500 Index handlas kring 17,2 och MSCI Emerging Markets Index handlas betydligt billigare vid ett p/e tal 12,8.
Key highlights Another Curveball for Indian Gold Demand
After loosening some of the restrictions on gold imports in May, the Indian government may re-tighten amid a strong resurgence in gold import demand. The Finance Ministry and central bank met today to discuss, but will reconvene in a few days after failing to come to a decision.
We believe the short-term impact of the discussions will be for consumers increase purchases before any tightening takes place. Historically, tighter restrictions have led to the price of gold being substantially higher in India than elsewhere.
Higher premiums that could follow a potential tightening of restrictions will however dampen demand going forward, reducing come of the support for the gold price in 2015.
Today, the Indian Finance Ministry and Reserve Bank of India (the central bank) met to discuss reintroducing some of the curbs on gold imports that were eased in May this year. Responding to a widening current account deficit the authorities introduced draconian restrictions on gold imports last year. The main feature of the restrictions – a rule that requires 20% of all imports to re-exported (the so-called “80-20” rule) remains intact. In May however, private trading firms were allowed to import the metal after being barred from doing so in July 2013. Imports of gold have risen substantially following the lift in the restriction.
In May, when the restrictions on private trading houses were lifted, the premium on Indian gold i.e. how much higher gold trades in India compared to the London fix fell from over US$260/oz to just over $140/oz today.
There is speculation that the restrictions on private trading firms will be re-introduced following the meeting between the Ministry of Finance and the RBI. We could see the premium rise once more and we believe that we could see increased buying of the metal as consumers try to get ahead of the move.
Over time however, tighter restrictions will curb imports and dampen sales in India, removing some of the support for global prices.
For more information contact:
ETF Securities Research team
ETF Securities (US) LLC
T +1 (212) 918 4954
E infony@etfsecurities.com
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Gold ETPs saw first inflow in five weeks
Agricultural basket ETPs saw their largest inflows since January 2013
ETFS Daily Leveraged Natural Gas received US$10.0mn of inflows, the highest since February 2014
Price gains in industrial metals attracted flows into copper, while driving profit-taking elsewhere
Most commodity prices bounced back last week, attracting flows into a diverse range of commodity ETCs from gold to agricultural baskets. Gold ETPs saw their first inflows in a month as dovish Federal Open Market Committee minutes led to dollar weakness, while weak German data renewed interest in the hard defensive assets. With the exception of cocoa, all agricultural prices rose last week. Agricultural baskets saw their largest inflows in 20 months, bringing the year-to-date flows into agricultural baskets into positive territory for the first time since April 2014.
Gold ETPs saw first inflow in five weeks. Gold ETPs received US$18.3mn of inflows last week as the price of gold rose 1.2% in US dollar terms, amid US currency weakness following the dovish Federal Reserve meeting minutes release. With gold prices having fallen close to the marginal cost of production and speculative futures market shorts positions having risen close to all-time highs, last week’s bounce could trigger a short-covering rally helping to sustain momentum in the upward trend. Additionally weak data from Germany unscored the fragile state of the Euro area, bolstering the case for further easing from the European Central Bank, which may strengthen demand for gold as a monetary metal. At the same time physical demand for the gold is likely to see a seasonal lift from the upcoming Diwali celebrations in India (23rd October).
Agricultural basket ETPs saw their largest inflows since January 2013. In particular, with US$22.7mn of inflows, ETFS Agriculture (AIGA) saw its largest inflow since inception (2006). That marks a decisive change in sentiment toward agricultural commodities, where speculative futures market shorts for wheat, corn, soy and sugar have risen to near-record highs amid bumper crop expectations. Corn prices rose 6.8% last week as US exports for the crop picked up strongly. Wheat ETPs saw their first outflow in 21 weeks. Investors had been steadily building positions in wheat as the price slid to the lowest level since 2010. Last week’s 2.2% bounce in price led to some profit-taking.
ETFS Daily Leveraged Natural Gas received US$10.0mn of inflows, the highest since February 2014. While most commodity prices rose last week, energy prices bucked the trend. With US natural gas prices falling a further 3.8% last week, investors bought leveraged exposure, expecting a seasonal increase in demand to shake out the bearish sentiment toward the commodity. Price gains in industrial metals attracted flows into copper, while driving profittaking elsewhere. With the exception of tin, all industrial metal prices rose last week.
ETFS Copper (COPA) received its first inflow in six weeks. Meanwhile profit taking saw US$11.1mn of outflows from ETFS Aluminium (ALUM), adding to the US$59.9mn of outflows the previous week, reversing all of the strong inflows we saw in July and August. ETFS Zinc (ZINC) saw US$2.9mn of outflows, the largest in eight weeks.
Key events to watch this week. A raft of Chinese economic data releases will help investors gauge the strength of the economy that drives the bulk of commodity demand globally. Chinese trade, loan growth, money supply growth, inflation and FX reserves growth data are due to be released next week. US retail sales will be closely watched as the Fed assesses the capacity of the US economy to accommodate rate increases next year.
Video Presentation
Nitesh Shah, 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.
For more information contact
ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com
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