En ETF att titta på inför Brexit. Ett av vårens stora samtalsämnen har varit Storbritanniens eventuella utträde ur EU eller inte. Detta är känt som ”Brexit”, och har varit den bidragande orsaken till att CurrencyShares British Pound Sterling Trust (NYSEArca: FXB) varit utsatt för en enorm press under året. Denna börshandlade fond har emellertid börjat stabilisera sig under den senaste månaden. Är FXB en ETF att titta på inför Brexit?
Att investera på valutamarknaden är ett sätt för placerare att diversifiera och hedga sin portfölj, vilket minskar risken samtidigt som det ger dem en potential till värdeökning. De placerare som köper aktier i USA eller i Kanada tar på sig valutarisker. Om den utländska valutan försvagas jämfört med den svenska kronan kommer värdet på de utländska investeringarna också att sjunka i värde när omvandlas tillbaka till svenska kronor.
De flesta, om inte alla problem som FXB har haft under våren kan hänföras till farhågorna om att Storbritannien skulle kunna välja att lämna EU när en folkomröstning i frågan hålls i slutet av juni. När det är en månad kvar till folkomröstningen har spekulationerna intensifierats om hur hårt pundet kommer att straffas om Storbritannienlämnar EU.
Om Storbritannien lämnar EU, är det troligt att pundet försvagas betydligt direkt efter folkomröstningen. Om folkomröstningen kommer fram till att britterna vill lämna EU kommer det sannolikt att leda till att Storbritannien kommer att påbörja processen med att avsluta sitt medlemskap. Den direkta effekten av detta kommer att bli att såväl utländska och som inhemska investerare kommer att börja avveckla sina brittiska tillgångar och flytta dem till euro, US-dollar, eller andra valutor.
Tidigare i år noterade FXB en all-time-low när spekulationerna intensifierades om att Storbritanniens utträde ur EU var en reell möjlighet. Valutahandlare världen över är överens om att en sådan händelse skulle drabba det brittiska pundet hårt.
Kreditvärderingsinstitutet Moodys har varnat för att det kan komma att nedgradera Storbritanniens kreditvärdighet om landet lämnar den europeiska unionen. Många av de stora välkända fondförvaltarna håller med och bekräftar att de är av åsikten att pundet och brittiska aktier kan lida till följd av en ”Brexit.”
BOE, Bank of England, beslutade nyligen i ett enhälligt beslut att lämna styrräntan oförändrad, men samtidigt meddelades att landets centralbank sänker sin tillväxtprognos för det andra kvartalet. Den senaste inflationsrapporten visade också att den ekonomiska tillväxten skulle öka under andra halvåret 2016. BOE mål är en inflation på 0,9 procent för året vilket ger Bank of England gott om utrymme att stimulera ekonomin.
Ekonomiska data från Storbritannien har varit ganska mjuk under senare tid, vilket skulle kunna leda till ytterligare penningpolitiska åtgärder från BOE. Detta i kombination med rädsla för Brexit tyder på att risken för det brittiska pundet ligger på nedsidan. Skulle det emellertid visa sig att folkomröstningen visar att britterna vill stanna i EU då är FXB en ETF att titta på inför Brexit.
Market Insight – Foreign Exchange – Sterling likely to suffer as Brexit back in focus
Campaigns begin
Following the selection of “Vote Leave” and “Britain Stronger in Europe” as the official campaigns for June’s EU referendum, the build-up towards the highly controversial vote will now truly get underway. Market commentators and media pundits will increasingly pay heed to any change in public voting intentions, and political stories will be scrutinised for any sign of weakness from either campaign. The GBP has already fallen victim to the uncertainty associated with the referendum, falling just over 7%* on a trade weighted basis year to date (see Figure 1). Increasing coverage of the vote in coming weeks will likely see the GBP exhibit elevated levels of volatility and may cause further moves to the downside.
Figure 1
(Click to enlarge)
Uncertainty clouds fundamentals
The latest Monetary Policy Committee (MPC) minutes made specific reference to the potential “referendum effects” in the short term that could cloud the interpretation of macroeconomic indicators in coming months. Uncertainty will remain the dominant theme ahead of the referendum, likely making sentiment, rather than fundamentals, the key driver of Sterling moves in the short term.
Short positions continue building
Latest market positioning data shows that currency speculators have continued to build short positions against the GBP, with the total outstanding short contracts reaching the highest level for around three years (see Figure 1). The option market also reflects a similar story, with a record level of investors purchasing protection against downside movements in the Sterling.
This suggests that unless there is a fundamental shift in polling results, risks to the Sterling would continue to be skewed to the downside.
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Coffee rebounds following Brazilian Real appreciation.
Chinese stocks cheer signs of further stimulus.
Sterling comes under pressure on inflation concerns.
Today Angela Merkel will host talks with Alex Tsipras, the Greek premier, in a bid to improve relations between the two nations and ensure the future of Greece within the Eurozone. The meeting comes as recent negotiations over the conditions of a Greek bailout package have divided public opinion and strained political ties. Elsewhere, the release of a series of manufacturing and home sales data this week will give investors the opportunity to gauge the health of major global economies. CPI data from the US and the UK will give clarity on the impact of low energy and food prices on inflation and the potential pace of rate hikes.
Commodities
Coffee rebounds following Brazilian Real appreciation. Coffee prices have come under significant pressure this year, falling 24% to US$1.26 per pound last week. This downward trend has been driven by healthy rainfall and a significant depreciation of the Brazilian Real. A weaker Real allows Brazilian producers to export coffee internationally at lower prices in US Dollar terms, without receiving less in their domestic currency. Last week the return of drier weather conditions and a temporary appreciation of the Real on Tuesday caused a reversal of the recent trend with coffee ending the week up 8.7%. US crude fell to a six-year low last week as stockpiles continued to accumulate and shale production showed little to no signs of slowing. US shale producers have shifted focus to rig efficiency and cost reduction to maintain output at current levels. Later in the year the curtailment of exploration spending and fall in the rig count should act to moderate US crude oil production and lift prices.
Equities
Chinese stocks cheer signs of further stimulus. On Sunday, the Chinese premier Li Keqiang pledged to shore up the economy to ensure that it meets its 7% growth target. Chinese equity markets rallied in approval, taking the statement as an indication that further stimulus measures are on their way in the form of reserve requirement reductions and interest rate cuts. The MSCI China A Index ended the week up 7.4% at an all-time high on the news. The FTSE 100 rose 3.0% in the week following the UK Chancellor of the Exchequers announcement of the 2015 pre-election budget. The budget sent energy and real estate stocks higher as the Chancellor announced measures to reduce tax on North Sea oil & gas companies and assist first time homebuyers. The EURO STOXX 50® Investable Volatility Index increased 3.6% as tensions mounted between Greece and Germany over reforms necessary in order to secure bailout funds.
Currencies
Sterling comes under pressure on inflation concerns. Following the Federal Open Market Committee meeting last week, a cautious press statement caused the Sterling to rise by 1.5% against the Dollar, the largest daily increase in five and a half years. These gains proved temporary as the Dollar recouped the prior day losses against most major currencies. Furthermore, minutes from the latest BOE meeting highlighted that consumer inflation will likely fall below zero soon and could potentially stay there if energy and food prices keep inflationary pressures at bay. Sterling is likely to continue to experience volatility in coming months, as the lack of a clear favorite in the upcoming general election and the growing popularity of parties on the fringe could lead investors to question the conviction of the British government.
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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US Dollar to Remain Strong on Dovish Central Bank Rhetoric
US Dollar to Remain Strong on Dovish Central Bank Rhetoric. ETFS CURRENCY WEEKLY
A weekly overview of global currency market developments. The report details the past week’s performance of G10 currency pairs and currency baskets, directional model signals for the week ahead, longer-term consensus currency forecasts, futures market positioning data and a macroeconomic commentary on the FX market.
US Dollar to Remain Strong on Dovish Central Bank Rhetoric
ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@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 (”FCA”).
Investments may go up or down in value and you may lose some or all of the amount invested. Past performance is not necessarily a guide to future performance. You should consult an independent investment adviser prior to making any investment in order to determine its suitability to your circumstances.
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 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.
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”Dow Jones,” ”UBS”, DJ-UBS CISM,”, ”DJ-UBS CI-F3SM,” and any related indices or sub-indices are service marks of Dow Jones Trademark Holdings LLC (”Dow Jones”), CME Group Index Services LLC (”CME Indexes”), UBS AG (”UBS”) or UBS Securities LLC (”UBS Securities”), as the case may be, and have been licensed for use by the Issuer. The securities issued by CSL although based on components of the Dow Jones UBS Commodity Index 3 month ForwardSM are not sponsored, endorsed, sold or promoted by Dow Jones, CME Indexes, UBS, UBS Securities or any of their respective subsidiaries or affiliates, and none of Dow Jones, CME Indexes, UBS, UBS Securities, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product.
Yen Strength Unlikely To Last Despite Investors’ Defensive Stance
Yen Strength Unlikely To Last Despite Investors’ Defensive Stance. A weekly overview of global currency market developments. The report details the past week’s performance of G10 currency pairs and currency baskets, directional model signals for the week ahead, longer-term consensus currency forecasts, futures market positioning data and a macroeconomic commentary on the FX market.
Summary
• Further Euro weakness likely as growth divergence continues
• Another difficult week for GBP
• USD to benefit from solid consumption and production
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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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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 (”FCA”).
Investments may go up or down in value and you may lose some or all of the amount invested. Past performance is not necessarily a guide to future performance. You should consult an independent investment adviser prior to making any investment in order to determine its suitability to your circumstances.
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 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 FSA 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.
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.
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