Etikett: Robotic ETPs

Industrial metal ETP inflows resume

Industrial metal ETP inflows resume ETF SecuritiesIndustrial metal ETP inflows resume

ETF Securities Weekly Flows Analysis – Industrial metal ETP inflows resume

Highlights

  • Industrial metal ETPs saw their first inflows in four weeks
  • Robotic ETPs saw highest inflows since March 2017.
  • Outflows from oil ETPs continued as early-week price gains fail to hold.

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Industrial metal ETPs saw their first inflows in four weeks.

As industrial metal positioning started to look stretched in August, we saw outflows begin and that continued as prices fell. However, last week as prices of most metals started to show signs of reaching a trough, inflows resumed. Speculative positioning in the futures market have pared back and volumes of trading in Shanghai have fallen indicating momentum trades are being shaken out. We saw US$5.0mn into long copper and US$4.4 into long nickel ETPs. Nickel is likely to benefit from growing demand for battery technology. Last week China announced that 10% of vehicles that automakers produce in 2019 must be low or zero emission, rising to 12% in 2020. With a higher loading of nickel expected in future batteries, the metal stands to benefit from regulatory driven changes in demand.

 

Robotic ETPs saw highest inflows since March 2017.

US$29.1mn of inflows marked the highest since March. Investors are impressed with a 35% return over the past year. Although technology stocks pared back gains in September, robotic stocks bucked the trend, posting over 4% gain.

 

Crude oil ETP outflows reached a 7-week high.

Oil prices received a boost earlier in the week as the autonomous Kurdish region in Iraq went to vote for independence. Investors took profits, withdrawing US$53.1mn from long crude oil ETPs. There is a risk that this oil-rich region, which produces more than ½ million barrels per day (mb/d) of Iraq’s 4½ (mb/d) output could be shut off from international markets as the Iraqi government bans the sale of oil from the region. This threat was largely ignored until the Turkish government claimed it will shut off the pipeline that carries the crude. Brent reached a 2-year high on Monday, rising almost 4% on the day. However the likelihood of Turkey following through is slim, given that it depends heavily on this source of oil and it is difficult to find alternatives at such short notice. Indeed the position of the Kurdistan Regional Government (KRG) is that they want the vote to open dialogue with the Iraqi government about independence rather than a declaration of independence itself. Despite the heated rhetoric and military drills, it is very likely that production will remain uninterrupted.

US$13.4mn of gold ETP outflows follow two weeks of inflows.

It looks like investors’ mind-sets are back on monetary policy after sabre-rattling between US and North Korea temporarily shifted their attention towards geopolitics. US Federal Reserve Chair Yellen emphasised in her speech last week that there are risks in moving too slowly in tightening. US 10-yr Treasures rose to 2.31% from 2.25% a week earlier, while the US dollar index gained 0.8%. Gold fell from US$1310/oz on Tuesday to US$1287.91/oz on Friday. Investors sold as gold prices fell.

 

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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Investors taking advantage of recent oil price weakness

Investors taking advantage of recent oil price weakness

ETF Securities Weekly Flows Analysis – Investors taking advantage of recent oil price weakness

  • Oil ETP inflows of US$73mn last week represented the 5th consecutive week of inflows which total US$140mn, representing 9% of assets under management.
  • Robotic ETPs continue to see robust inflows, with inflows of US$20m last week and US$206m for this year so far.
  • Despite the signing of Article 50, we saw little activity in GBP related ETPs with minor outflows of US$0.4m. Investors are adopting a contrarian position relative to the futures market.

Oil ETP inflows of US$73mn last week represented the 5th consecutive week of inflows which total US$140mn, representing 9% of assets under management. Investors have seen the recent oil price weakness (-8.6% ytd), as a consequence of poor discipline to the agreed OPEC production freezes and record exports of oil from the US, as an opportunity to buy on weakness. Inflows over the longer term have not recovered to the stellar levels seen in 2015, we believe this reflects investor’s concerns over technological improvements in the tight oil market in the US, where marginal costs of production have fallen to competitive levels relative to OPEC, effectively challenging OPEC as the new swing producer. We maintain our view the upside to the oil price is limited to US$55/bbl and we will continue to see poor compliance to the agreed OPEC production freezes.

Robotic ETPs continue to see robust inflows, with inflows of US$20m last week and US$206m for this year so far (nearly 100% of AuM). Since the launch in October 2014 we have not seen a single week of outflows, indicating that investors see Robotics as a long-term investment. Other thematic styles such as Cyber security are garnering similar attention with inflows of US$56m year to date.

Gold ETPs saw outflows last week of US$43m, although net flows year to date remain positive at US$503m. Gold’s has risen 7.3% year to date, outstripping most developed market equities and bonds. Other precious metals such as silver and palladium have risen 11% and 18% respectively this year. We believe the mid-year fair-value of gold is US$1300 due to heightened worries over fiscal and policy uncertainty coupled with inflationary fees. The biggest risk to gold is aggressive monetary policy tightening, pushing real interest rates into positive territory.

Despite the signing of Article 50, we saw little activity in GBP related ETPs, with minor outflows of US$0.4m. For the full year, inflows into GBP long ETPs stand at US$20m, representing a 33% rise in AuM, since the EU referendum in June 2016 we have seen a 200% rise in long GBP ETPs. This suggests that investors are adopting a contrarian position relative to the futures market where short positions on GBP are close to their all-time highs.

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ETF Securities Research team ETF Securities (UK) Limited T +44 (0) 207 448 4336 E info@etfsecurities.com

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