Ny regim sänker risken i Sydafrika

Ny regim sänker risken i Sydafrika ETF Börshandlad fondNy regim sänker risken i Sydafrika

iShares MSCI Sydafrika ETF (NYSEArca: EZA) steg med nästan åtta procent i värde, mätt i dollar, i förra veckan. Den primära orsaken till värdeökningen för börshandlade fond var att Sydafrikas president, Jacob Zuma avgång. Vissa analytiker och marknadsobservatörer tror att den kontroversielle Zumas avgång kommer att minska risken i Sydafrika och för landets ekonomi.

Sydafrika är en av Afrikas största ekonomier. Landet är även en stor guldproducent och är en av de två främsta producenterna av palladium och platina i världen. Sydafrikanska gruvföretag har åtnjutit förbättrade marginaler på grund av en ökning av råvarupriserna som järnmalm och platina medan den sydafrikanska randen har försvagats mot dollarn.

Zumas avgång minskar risken för politisk förlamning

”Jacob Zumas avgång som president i Sydafrika minskar risken för politisk förlamning”, skriver Fitch Ratings. ”Zumas efterträdare, Cyril Ramaphosa, kommer att lägga större fokus på att förbättra styrningen och stärka landets ekonomiska och finansiella politik, vilket sannolikt kommer att bidra till en återhämtning i företagens förtroende och tillväxt. Huruvida detta kommer att vara tillräckligt för att leda till en betydande förbättring av statsskuldsituation och trendutvecklingen är osäkert”.

EZA som har cirka en halv miljard dollar under förvaltning, följer MSCI South Africa 25/50 Index och har drygt 50 aktier i sin portfölj. EZA har allokerat 31,6% av sin vikt till finansiella tjänster och över 27 % till den konsumentdiskretionära sektorn. Konsumentsektorn står för 9 % av denna börshandlade fonds kapital.

Även med Zumas avgång kvarstår vissa risker.

”Så länge tillväxten är för svag för att förbättra levnadsvillkoren för majoriteten av befolkningen, kan politiskt tryck leda till en populistisk politik som skadar tillväxten eller de offentliga finanserna” skriver Fitch. ”ANCs antagande i slutet av förra året av en resolution till förmån för markexpropriation utan ersättning pekar på ett sådant tryck, även om Ramaphosa i sin State of the Nation Address åtagit sig att genomföra politiken på ett sätt som minimerar de negativa ekonomiska effekterna.”

EZA har en treårig standardavvikelse på nästan 23 %, vilket ligger långt över MSCI Emerging Markets Index. Fondens efterföljande tolvmånadersutdelning är 1,5 %

Macro outlook supports the mining sector but further upside remains muted

Macro outlook supports the mining sector but further upside remains muted

ETF Securities Equity Research: Macro outlook supports the mining sector but further upside remains muted

Highlights

  • Demand for metals remains well supported by a favourable macro-economic backdrop but China’s reform policy is expected to soften future metal demand.
  • The benefits of the weaker US dollar on higher commodity prices are outweighed by higher local currency input costs for producers in the mining sector.
  • Capex growth has turned positive for the first time in five years and the electric car revolution opens further avenues of investment for the mining sector.
  • Strict capital discipline among the miners has improved operational efficiency but miner’s valuations are not cheap.

Macro outlook supports demand

The global economy looks set to embark on a strong growth trajectory evident from the improvement in global purchasing manufacturing indices (PMI) since the second half of 2016. The optimism over global expansion increasing consumption of metals has led to a revival in the price of most metals this year. As a consequence, we have witnessed the top 100 diversified miner’s aggregate price appreciate 86% since 31 January 2016 (Source: Bloomberg).

Added to that, the current weakness of the US dollar is acting as an important catalyst in fuelling the commodity price rebound. As the world’s largest economy enters the late stage of the economic expansion cycle we expect to see tightening of the labour market combined with rising inflation, commodity prices and interest rates as the Federal Reserve normalises policy. The raw industrials index and the trade weighted US dollar tend to move inversely to each other with a negative 0.80 correlation. This counter cyclical relationship bodes well for base metal prices as investors look towards metals as a store of value versus the greenback. While the mining sector will benefit from higher commodity prices, the weaker US dollar could temper the benefits for producers that have a high proportion of costs in local currency.

China’s reforms take centre stage

A government led initiative in China’s construction industry since early 2016 underpinned the rebound of industrial metal prices. The emphasis on reforms as highlighted by President Xi at 19th National Party Congress in October 2017 suggests Chinese economic growth will gravitate more towards services and consumer spending. These activities are significantly less resource intensive and could soften demand for industrial metals. Added to that, the ongoing cooling of fiscal stimulus to the manufacturing and construction industries that kick started in H217, will further dampen new demand for industrial metals.

That being said, China’s supply side reform, to tackle environmental pollution, address unlicensed production and excess supply, resulted in significant escalation in metal prices last year. The widespread efforts improved capacity utilization rates within the aluminium, coal and steel industries. To a large extent, the impact of the capacity reductions in steel and coal appear to have already passed their peak, as the Chinese governments met their targets late last year.

Miners are back in business

After five consecutive years of negative growth in capex, total spending has finally turned positive, rising 8% since the prior year. A large part of the spending has been dedicated to sustaining production rather than expansionary projects. Miners are tapping into the new sources of growth led by technology driven innovation. At the forefront of this revolution, electric car production is expected to bolster demand for lithium, cobalt, copper and aluminium. Mining companies owning lithium and cobalt deposits are well positioned to benefit from rising demand owing to their use in battery cathodes.

Ongoing supply deficits projected

A vast variety of metals are projected to continue to extend their supply deficits into 2018 as demand outstrips supply. Declining inventory levels of global metals stocks namely – zinc, copper, aluminium, platinum, palladium and tin remain supportive of their price recovery. However deteriorating ore grades and falling reserves, make it vital for miners to undertake further exploration projects to maintain their current production.

Miners are not cheap

Owing to the challenging pricing environment between 2011 and 2016 the mining sector imposed a stricter capital discipline in an effort to shore up their balance sheet. Since mid-2016, valuations for the sector have climbed in lock step with rising profitability. Mining stocks currently trade at 17x earnings compared to the long term average of 10x, supported by higher earnings growth (Source: Bloomberg, as of 30 January 2018). Meanwhile, the current price to book ratio at 2x trades in line with its long term average of 1.7x as impairments charges reduced significantly. Recovering commodity prices, an emphasis on debt repayments and improving liquidity have helped alleviate pressure from ratings agencies as ratings outlooks for base and precious metal miners turn positive.

For more information contact:

Catarina Donat Marques
ETF Securities (UK) Limited
T +44 20 7448 4386
E catarina.donatmarques@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

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.

Platinum – More uncertainty than opportunity

Platinum – More uncertainty than opportunity

Summary

Palladium’s outperformance is tied to a confluence of reasons – the ‘Dieselgate’ scandal, strong auto demand and speculative buying interest. However this is unsustainable.
Accelerating growth in the European auto sector should offset the gradual decline in diesel cars market share, supporting platinum’s demand. Platinum – More uncertainty than opportunity.

Platinum’s sustainable long term price recovery is rooted in meaningful production cuts.
Palladium has rallied 43% in 2017, marking the strongest performance within the commodity complex. It has surpassed its counterpart platinum for the first time in 16 years. The price movement of platinum and palladium has historically been in sync since the majority of their use is derived by catalytic converters used in gasoline and diesel vehicles respectively.

Net Balance vs Ratio

The last time we witnessed a similar price outperformance by palladium was in 2000, triggered by supply disruptions in Russia. While the Russian government’s threat to stop selling palladium never materialised, it certainly prompted a fear of a supply deficit amplifying palladium’s price surge. It’s worth noting that consequently palladium underperformed platinum for more than eight consecutive years.

‘Dieselgate’ lifted palladium higher

Demand for platinum suffered a setback after the emissions scandal sparked by Volkswagen two years ago dented investor sentiment towards the precious metal. Data from the European Automobile Manufacturers Association (ACEA) has revealed in H1 2017 that sales of gasoline powered cars in Europe surpassed diesel powered cars for the first time since 2009. The share of diesel cars declined by 3.8% YTD (year-to-date) while gasoline cars rose by 10% YTD. In France, gasoline cars are currently dominating market share contrary to its historical 70% ownership of diesel cars. In addition the rising demand for relatively larger gasoline cars, which contain larger motors, combined with stricter emission standards has increased the loading requirements of palladium. This shift in consumer preferences in size and category of cars had a strong role to play in the recent divergence of performance between the two precious metals. That being said, auto sales in US and China, known for driving gasoline cars are softening and its effect could limit palladium’s upside in the near term.

Global auto sales growth

European auto demand bullish for platinum

Auto sales in Europe (dominated by diesel cars) are gaining momentum. Since the decline in diesel market share will be a gradual ongoing process, platinum demand will remain well supported. In addition as new emission standards in Europe intensify, platinum’s price recovery over the medium term remains well supported.

Platinum is known to be about twice as effective as palladium in catalytic convertors. The potential for substitution between the two precious metals is reliant on whether fabricators perceive platinum’s current price discount to palladium to persist for a substantial period. Furthermore supply shortage concerns of palladium (deficit predicted in 2018) in the long term could also be a cause for substitution away from palladium. Speculative interest unlikely to last

Palladium’s outperformance to a large extent can be attributed to speculative buying interest encouraged by the bullish backdrop for palladium. The first week of June witnessed a surge in the lease rate to borrow palladium from 3.5% to 16%, underscoring the shortage of palladium in the market. There is evidence that the strong buying interest from Asia overwhelmed the relatively small market. The palladium market is the smallest and least liquid market among the four tradable precious metals and remains vulnerable to sharp price swings caused by sudden speculative flow of money.

Palladium Imports vs Inventory

The forward curve of precious metals generally tends to be in contango (future price higher than current price). However palladium’s forward curve has been in backwardation for almost nine months, illustrating the tightness in the market. While contango is the cost of holding a commodity, backwardation is a benefit.

That being said, the slope of the backwardated palladium curve is allowing speculators to buy the lower priced forward contracts and roll up the price curve into the higher spot prices. This has allowed them to lock in a positive roll, which has been extremely attractive in the current low yielding environment. Owing to this, the bulk of demand for palladium is in the present, and that optimism is waning looking forward.

Platinum’s deep discounts support demand

While platinum has historically traded at a significant premium over gold, it’s currently trading at a -28% discount to gold. Platinum is highly correlated to gold, however in this cycle it has only tracked gold’s downward movements and captured very little of the upside. We believe this recent trend could be broken and traditional correlations restored if consumers recognise just how cheap platinum is right now. We expect price sensitive jewellery consumers to switch to the relatively cheap platinum especially as it is gaining further acceptance in key markets like China and India. Given a supportive backdrop of improving economic conditions globally combined with platinum’s relative price attractiveness, we expect demand for platinum to rise. We expect most of the growth to be concentrated in industrial applications – chemicals, glass and electrical (the second largest component at 20% of platinum consumption).

Platinum investment demand is strong

Out of the precious metals, physically-backed platinum ETPs have acquired the highest assets under management since 2012. While palladium has accumulated the least. Platinum’s relative price advantage and lower volatility will be the primary stimulus for the investment sector. Platinum holdings stands to benefit a portfolio by providing protection against inflation and financial asset deflation, while allowing positive upside as industrial demand recovers globally.

Physically backed ETPs

Platinum’s upside tied to supply cuts

Platinum producers in South Africa (known to account for 80% of global output) are struggling, as lower platinum prices and higher fixed costs coupled with weak demand from key segments are straining margins. So far, the miners have not meaningfully reduced production. Efforts to spread fixed costs over a wider output base have resulted in an oversupply. However this is unsustainable. Platinum miner Sibanye recently backed out from its announcement to shutter shafts worth 300koz at its Rustenburg site. Sibanye’s reluctance to shutter mines is illustrative of the unwillingness of producers to make meaningful supply cuts to stimulate prices.

Electric vehicle growth in nascent stage

Demand for electric vehicles (EVs) have been the focal point of future risks facing the platinum and palladium industry. While the auto industry is undergoing a structural shift, away from the internal combustion engine towards battery electric vehicles (BEVs). The reality is the uptake of sales of EVs is likely to be gradual. The reason behind this is the necessary infrastructure – development of batteries and charging stations to facilitate this shift will require a longer time frame than anticipated. China recently announced its intention to delay the enactment of the quota requiring automakers to produce a minimum number of EVs. Consumer acceptance of EVs hinge on extensive public subsidies.

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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.

Sydafrika ställs inför utmaningar under 2018

Sydafrika ställs inför utmaningar under 2018

iShares MSCI South Africa ETF (NYSEArca: EZA) avslutade 2017 i snabbt takt. Den största av de börshandlade fonder som har fokus på Sydafrika steg med över åtta procent årets sista vecka vilket summerade den årliga uppgången till över 30 procent. Även med den senaste tidens hausse för sydafrikanska aktier tror många analytiker att Sydafrika ställs inför utmaningar under 2018. Sydafrika är en av Afrikas största ekonomier.

Den politiska osäkerheten kommer att kvarstå i Sydafrika efter valet av Cyril Ramaphosa som ledare för afrikanska nationella kongressen, säger kreditratingföretaget Fitch Ratings. Närheten till resultatet och de sannolika utmaningarna för att komma överens om och genomföra förändringar i befintliga ekonomiska och skattemässiga inställningar, tyder på att det kan komma att bli en politisk förlamning om det inte kan lösas snabbt, innan denna veckas nationella konferens.

Investerare optimistiska till pro-reformkandidaten

Förra veckan ökade EZA- och sydafrikanska marknaderna som investerare var optimistiska att pro-reformkandidaten Cyril Ramaphosa säkrade segern i den styrande ANC: s ledningsröstning.

Den sydafrikanska vicepresidenten Cyril Ramaphosa valdes till ledamot av afrikanska nationalkongressen i sträng omröstning och försökte bekämpa olycklig korruption i en skandalplagad parti och att återuppliva ekonomin.

Sydafrika är en stor producent av guld och är som en av de två främsta producenterna av palladium och platina i världen. Sydafrikanska gruvföretag har njutit av förbättrade marginaler på grund av en ökning av priserna på råvaror som järnmalm och platina medan randvalutan fallit mot dollarn.

Politiska utmaningar förblir betydelsefulla

Men politisk osäkerhet och politiska utmaningar förblir betydelsefulla”, säger Fitch. Fördelningen av partiordförandeskapet och det nationella ordförandeskapet kan öka ineffektiviteten i beslutsfattandet om det finns en period av”sambo”. ANC:s sex främsta ledande positioner är jämnt fördelade mellan de som ligger i linje med Ramaphosa och de som troddes vara närmare Zuma. Den nationella verkställande kommittén kommer sannolikt också att delas.

EZA, som har nästan 450 miljoner dollar i förvaltat kapital, följer MSCI South Africa 25/50 Index och äger aktier i drygt 50 företag.

Den ekonomiska och finanspolitiska osäkerheten kan därför förbli hög om Sydafrika ställs inför utmaningar under 2018. Den sydafrikanska ekonomin spås växa med 1,8 procent under 2018 och med 2,0 procent under 2010. Detta är betydligt högre än den tillväxt som landet presterat de senaste två åren, men fortfarande lägre än ”BB” ratingkategori medianen.

Commodity rally drives a mixture of profit-taking and position building

Commodity rally drives a mixture of profit-taking and position building

ETF Securities Weekly Flows Analysis – Commodity rally drives a mixture of profit-taking and position building

  • Crude oil, industrial metal and gold ETPs see inflows as the price rally draws in investors.
  • Palladium ETPs see profit taking after a very strong rally.
  • Inflows into short European equity ETPs the highest since July 2016.

Download the complete report (.pdf)

First inflows into crude oil ETPs since November 2016 as investors encouraged by Saudi Arabia adhering to quota. There were US$44.2mn of inflows into long crude oil ETPs last week as oil prices regained losses earlier in the week. Statements by the Saudi Arabian Energy Minister al-Falih indicate that the country has cut production by more than necessary to meet its quota and could reduce production further next month. However, we caution that domestic consumption falls in the winter and so the level of exports from Saudi Arabia may remain the same. With WTI oil price above US$50/bbl since the beginning of December 2016, both production and exports in the US have surged. US production of oil was 2.9% higher in the first week of January compared to the first week of December.

Gold ETPs see third consecutive week of inflows. Inflows of US$22.3mn indicate that investors are combining their bullish cyclical positions with strategic hedges. Despite the equity and cyclical commodity rally in the first two weeks of the year, there is reason for investors to remain cautious. The ‘Trump Rally’ could be fleeting. Although many of the President Elect’s policies appear pro-growth, there is little detail on how they will be implemented. The risk of disappointment is high. The US Dollar (DXY) has lost about 2% while gold has gained close to 5% year-to-date as the vagueness of Trump’s policies has unsettled some investors.

Profit taking in palladium ETPs see an outflow of US$117.7mn. Palladium has had a very strong start to the year – gaining close to 11% – which has erased most of the losses the metal sustained in December. Johnson Matthey expect mine supplies to remain flat this year while demand – primarily from the auto sector – will grow. As a result palladium will likely be in the sixth consecutive year of a supply deficit.

Industrial metals rally drives largest inflow into broad metal baskets since November 2016. A combination of a weaker US dollar (in which most commodities are priced) and strong Chinese commodity import data led metal prices to continue to rally last week. Investors bought US$23.3mn of industrial metal basket ETPs and a further US$10mn in individual industrial metal ETPs last week. The market has largely brushed off the lack of detail behind Trump’s infrastructure spending plans and the relaxation of some of Indonesia’s ore export ban.

Investors increase positions in short European equities by the most since September 2015. Inflows of US$5.0mn into short DAX ETPs and US$7.8mn into short FTSE100 ETPs shows that some investors are increasing contrarian positions following the strong equity rally. Meanwhile, the growing relevance of automation in a world where demographic aging and access to low cost migrant workers could become more difficult has led to rising investor interest in robotic equities. Last week’s inflows of US$10.2mn was the highest since October and marks the 18th consecutive week of inflows in ETFs capturing this theme.

Video Presentation

Nitesh Shah, Director, Commodity Research 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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None of the Issuers is required to have a license pursuant to the Dutch Financial Supervision Act as it is exempt from any licensing requirements and is not regulated by the Netherlands Authority for the Financial Markets and consequently no prudential and conduct of business supervision will be exercised.

For Austrian, Danish, Finnish, Portuguese, Spanish and Swedish Investors: The prospectuses (and any supplements thereto) for each of CSL, HCSL, HMSL, MSL, ESL and FXL have been passported from the United Kingdom into Austria, Denmark, Finland, Portugal, Spain, Sweden and have been filed with Österreichische Finanzmarktaufsicht (Austrian Financial Market Authority) in Austria, Finanstilsynet (Financial Supervisory Authority) in Denmark, Finanssivalvonta (Finnish Financial Supervisory Authority) in Finland, Comissão do Mercado de Valores Mobiliários (Portuguese Securities Market Commission) in Portugal, Comisión Nacional del Mercado de Valores (Securities Market Commission) in Spain and the Finansinspektionen (Financial Supervisory Authority) in Sweden. The prospectuses (and any supplements thereto) for these entities may be distributed to investors in Austria, Finland, Portugal, Spain, Denmark and Sweden.

For Belgian Investors: The prospectuses (and any supplements thereto) for GBS, CSL, MSL and FXL have been passported from the United Kingdom into Belgium and has been filed with the Commission Bancair, Financiére et des Assurances in Belgium. The prospectuses (and any supplements thereto) for GBS, CSL, MSL and FXL may be distributed to investors in Belgium.

For Swiss investors: The prospectus (and any supplements thereto) for SCSL may be distributed to investors in Switzerland. Securities in SCSL are not shares or units in collective investment schemes within the meaning of CISA. They have not been approved by the Swiss Financial Market Supervisory Authority (FINMA) and are not subject to its supervision. The Swiss Franc Currency-Hedged Commodity Securities are not issued or guaranteed by a supervised financial intermediary within the meaning of CISA.

This document does not constitute a prospectus under the Companies (Jersey) Law 1991 and is not an offer or an invitation to acquire securities in SCSL. This document does not constitute a Swiss listing prospectus under the SIX Listing Rules and the SIX Additional Rules for the listing of Exchange Traded Products. This document must be read in conjunction with the Swiss Listing Prospectus. If there is any inconsistency between this document and the Swiss Listing Prospectus, the Swiss Listing Prospectus shall prevail. Detailed information on the terms and conditions of the Swiss Franc Currency-Hedged Commodity Securities can be found in the Swiss Listing Prospectus under Part 6 – Trust Instrument and Swiss Franc Currency-Hedged Commodity Securities.

Other than as set out above investors may contact ETFS UK at +44 (0)20 7448 4330 or at info@etfsecurities.com to obtain copies of prospectuses and related regulatory documentation, including annual reports. Other than as separately indicated, this communication is being made on a ”private placement” basis and is intended solely for the professional / institutional recipient to which it is delivered.

Securities issued by the Issuers are direct, limited recourse obligations of the relevant Issuer alone and are not obligations of or guaranteed by any of UBS AG (”UBS”), Merrill Lynch Commodities Inc. (”MLCI”), Merrill Lynch International (”MLI”), Bank of America Corporation (”BAC”), Bloomberg Finance LP (”Bloomberg”), Société Générale (”SG ”), Shell Trading Switzerland, Shell Treasury, HSBC Bank plc, JP Morgan Chase Bank, N.A., Morgan Stanley & Co International plc, Morgan Stanley & Co. Incorporated or any of their affiliates or anyone else or any of their affiliates. Each of UBS, MLCI, MLI, BAC, Bloomberg, SG, Shell Trading Switzerland, Shell Treasury, HSBC Bank plc, JP Morgan Chase Bank, N.A., Morgan Stanley & Co International plc and Morgan Stanley & Co. Incorporated disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might have in respect of this communication or its contents otherwise arising in connection herewith.

Funds

Austria: Investors should base their investment decision only on the relevant prospectus of the Company, the Key Investor Information Document, any supplements or addenda thereto, the latest annual reports and semi-annual reports and the memorandum of incorporation and the articles of association, which can be obtained free of charge upon request at the Paying and Information Agent in Austria, Erste Bank der oesterreichischen Sparkassen AG, Graben 21, A1010 Wien, Österreich and on www.etfsecurities.com.

France: Any subscription for shares of the Funds will be made on the basis of the terms of the prospectus, the simplified prospectus and any supplements or addenda thereto. The Company is a UCITS governed by Irish legislation and approved by the Financial Regulator as UCITS compliant with European regulations although may not have to comply with the same rules as those applicable to a similar product approved in France. Certain of the Funds have been registered for marketing in France by the Authority Financial Markets (Autorité des Marchés Financiers) and may be distributed to investors in France. Copies of all documents (i.e. the prospectus (including any supplements or addenda thereto, the Key Investor Information Document, the latest annual reports and the memorandum of incorporation and articles of association) are available in France, free of charge, at the French Centralizing Agent, Société Générale, Securities Services, at 1-5 rue du Débarcadère, 92700 Colombes – France. Germany: The offering of the Shares of the Fund has been notified to the German Financial Services Supervisory Authority (BaFin) in accordance with section 310 of the German Investment Code (KAGB). Copies of all documents (i.e. the Key Investor Information Document (in the German language), the prospectus, any supplements or addenda thereto, the latest annual reports and semi-annual reports and the memorandum of incorporation and the articles of association) can be obtained free of charge upon request at the Paying and Information Agent in Germany, HSBC Trinkaus & Burkhardt AG, Königsallee 21-23, 40212 Düsseldorf and on www.etfsecurities.com. The current offering and redemption prices as well as the net asset value and possible notifications of the investors can also be requested free of charge at the same address. In Germany the Shares will be settled as co-owner shares in a Global Bearer certificate issued by Clearstream Banking AG. This type of settlement only occurs in Germany because there is no direct link between the English and German clearing and settlement systems CREST and Clearstream. For this reason the ISIN used for trading of the Shares in Germany differs from the ISIN used in other countries.

Netherlands: Each Fund has been registered with the Netherlands Authority for the Financial Markets following the UCITS passport-procedure pursuant to section 2:72 of the Dutch Financial Supervision Act.

United Kingdom: Each Fund is a recognised scheme under section 264 of the Financial Services and Markets Act 2000 and so the prospectus may be distributed to investors in the United Kingdom. Copies of all documents (i.e. the Key Investor Information Document, the prospectus, any supplements or addenda thereto, the latest annual reports and semi-annual reports and the memorandum of incorporation and the articles of association) are available in the United Kingdom from www.etfsecurities.com.

None of the index providers of the Funds referred to herein nor their licensors make any warranty or representation whatsoever either as to the results obtained from use of the relevant indices and/or the figures at which such indices stand at any particular day or otherwise. None of the index providers shall be liable to any person for any errors or significant delays in the relevant indices nor shall be under any obligation to advise any person of any error or significant delay therein.