ETF Securities Weekly Flows Analysis Gold ETPs took the lion s share of outflows

Transcription

1 Aneeka Gupta Associate Director, Equity & Commodities Research 23 July 218 ETF Securities Weekly Flows Analysis Gold ETPs took the lion s share of outflows Gold fails to catch a tailwind from the trade wars Strong copper fundamentals appear to defy trade war threats Falling nickel prices continue to attract bargain hunters Weekly Flows by Sector (US$mn) TOTAL Diversified Energy Industrial Precious Agriculture Livestock Equities FX Top Inflows/Outflows (US$mn) Copper Nickel JPY Platinum Crude oil Natural Gas Precious metals Wheat Industrial Top / Bottom Performers Carbon Corn Wheat Soybeans Live Cattle Lead Nickel Palladium Lean Hogs Cocoa Gold % -% % Note: see next page (*) % -3.2% -.% -7.3% -7.6% % 4.1% 3.8% 3.7% 2.7% Gold fails to catch a tailwind from the trade wars. Gold ETP outflows surged last week by US$119.7mn, marking the third consecutive week of outflows as gold prices shed.81% last week, declining to US$ We believe the testimony of Fed Chair Powell before the US Senate had a strong role to play in gold s weak price performance last week. As his optimistic outlook on the US economy cemented the Federal Reserve s (Fed) rate hike trajectory for the rest of 218 supporting the US dollar higher. Since the start of 218, the stronger US dollar (up 3.17%) amidst the rising rate environment in the US, has underpinned the weakness of gold prices (down 6.62%). Last week, Larry Kudlow the US president s economic adviser, blamed the Chinese President Xi Jinping for stalling of trade dispute talks between the two nations. The Chinese Ministry of Foreign Affairs retaliated aggressively, by announcing that although it did not want a trade war, it was not afraid of one either. In the absence of any productive negotiation, the international trade wars seem to be intensifying and if this trend were to continue we expect inflation to accelerate at the cost of decelerating economic activity, which should favour gold. According to Commodity Futures Trading Commission (CFTC), net speculative positioning on gold futures is currently 1x standard deviation (as on 13 July 218) below their -year average, highlighting the extent of the negative sentiment towards the yellow metal. We expect, gold prices to stage a recovery over the second half of this year. Strong copper fundamentals appear to defy trade war threats as copper ETP inflows worth US$26.mn rose to their highest level in 14 weeks. Last week, Chinese economic growth slowed fractionally to 6.7% year-on-year compared to 6.8% last year. However monthly data reported by the National Bureau of Statistics (NBS) was mixed with industrial production and investment slowing but retail sales and house price growth higher. As a historically well-regarded barometer of world economic health, copper prices have been caught in the crosshairs of trade wars and slowing momentum from Chinese growth evident from the price slide over the past 6 consecutive weeks to US$6122. (as on 2 July 218). However optimism over the red metals strong fundamentals helped overcome the negative sentiment emanating from the trade wars as inflows into copper ETPs rose over the past two weeks. Failing collective wage negotiations at BHP s Escondida mine, the world s largest copper mine, highlight the risks to copper s current supply levels. Discussions are set to continue as the current collective agreement expires at the end of the month. As both sides have stated their desire to reach an agreement, a strike is less likely, however prices are likely to remain on tender hooks until we reach an agreement. Nickel ETP inflows garner momentum for the fourth week in a row as bargain hunters chase falling prices. Nickel prices suffered a sharp decline -3.18% last week with prices nearing a 3-month low on the back of news that the Chinese government is considering reducing incentives for buying electric cars from next year. Note: All flow and data in this report are based on ETF Securities ETP numbers to 2 July 218 and are denominated in USD unless otherwise indicated. Investments may go up or down in value and you may lose some or all of the amount invested.

2 2 ETF Securities Commodity ETP Flow Trends ETP FLOWS (in US$m) ASSETS TOTAL ,94.8-1, ,846 Diversified PERFORMANCE (US$) Precious Metals ,73 Basket % -3.8% -7.8% -4.7% Gold , % -3.2% -.4% -2.% Silver % -6.% -9.1% -6.9% Platinum % -.% -11.4% -12.% Palladium % -6.7% -1.8% 4.2% Energy , ,33 Basket % -2.1%.7% 28.% Crude oil , ,11-2.7% -2.% 13.4% 7.9% Natural Gas % -6.% -9.2% -21.8% Heating Oil % -1.1% 4.3% 4.% Gasoline %.% 3.1% 31.% Carbon % 13.4% 11.4% 229.2% Industrial Metals Basket % -9.% -12.7%.4% Aluminium % -6.7% -9.%.8% Copper % -9.6% -17.8% -1.7% Nickel % -11.%.2% 39.6% Zinc % -11.4% -21.6% -4.8% Tin % -4.3% -1.% -2.% Lead % -11.6% -14.1% -.2% Agriculture Basket % -3.6% -7.8% -17.1% Wheat % 2.4% 1.6% -14.3% Corn % -3.% -4.9% -18.% Soybeans % -.6% -13.6% -2.% Cotton % 2.2% 12.4% 28.8% Coffee % -.3% -16.6% -26.7% Sugar % -1.3% -28.1% -27.1% Soybean Oil % -4.6% -17.2% -2.% Cocoa % -7.6% 17.7% 13.9% Livestock Basket % -2.4% -9.1% -12.6% Lean Hogs % -11.4% -2.2% -19.8% Live Cattle % 1.7% -3.9% -9.6% Equities US.....% 1.8%.9% 1.% Europe %.6% -.1% 2.7% Asia % -6.4% -2.6% -14.3% Australia % 1.1%.% 1.2% FX G USD %.% 2.6%.7% CAD % 1.4% -4.% -4.8% EUR % 1.1% -.4% 1.7% GBP % -1.1% -.4% 1.9% CHF % -.4%.% -4.6% NOK % -.4% 3.9% -.% SEK % -1.% -6.6% -7.8% JPY % -.8% 3.%.7% CNY % -3.% -1.3% 2.2% INR % -.6% -4.% -.% AUD % -.1% -4.7% -6.% NZD % -.6% -1.9% -7.1% Commodity FX (*) All data as at 2 Jul 18, based on ETF Securities global commodity ETP flows and assets. In FX due to being pair trades there is double counting. Price performance is based on NAV data for commodities, indices for Bonds & Equities, Trade weighted indices for FX, Bloomberg

3 3 Net Cumulative Flows by Asset Classes over the past year Commodities - -1, -1, -2, Jul 17 Oct 17 Jan 18 Apr 18 Jul 18 Equities Jul 17 Oct 17 Jan 18 Apr 18 Jul 18 Currencies Jul 17 Oct 17 Jan 18 Apr 18 Jul 18 All Commodity ETPs Flows Analysis DIVERSIFIED Diversified All Commoditie Ex-Energy Ex-Ags and Liv Past Month Flows in Diversified ETPs DIVERSIFIED -$3.8 All Commodities -$6.9 Ex-Energy Ex-Agriculture and Livestock $3.1 1, Net Cumulative Flows into Diversified Commodities % -% % % 1% 6 4 Ex-Agriculture and Livestock

4 4 Energy ETPs Flows Analysis ENERGY Energy , ,33 Energy Basket Crude oil , ,11 Natural Gas Heating Oil Gasoline Carbon Past Month Flows Trends in Energy ETPs ENERGY Energy Basket.7 Crude oil Natural Gas 3.1 Heating Oil Gasoline Carbon..6, Net Cumulative Flows into Energy -1% -% % % 1% 4, 4, 3, 3, 2, Gasoline 2, -2 1, Precious Metals ETPs Flows Analysis PRECIOUS METAL Precious Metals ,73 PM Basket Gold ,117 Silver Platinum Palladium Past Month Flows in Precious Metals ETPs PRECIOUS METALS PM Basket -$18.7 -$3.8 $2.9 Gold Silver $. -$ $1.9 $.2 Platinum $16.6 $2.7 Palladium -$.4 12, 11, 11, 1, 1, 9, 9, 8, Net Cumulative Flows into Precious Metals 8, % -% % % 1% 2 1 Platinum

5 Industrial Metals ETPs Flows Analysis INDUSTRIAL META Industrial Metals IM Basket Aluminium Copper Nickel Zinc Tin Lead , 1,4 1,3 1,2 1,1 1, Net Cumulative Flows into Industrial Metals INDUSTRIAL METALS Past Month Flows in Industrial Metals ETPs IM Basket Aluminium Copper Nickel Zinc Tin -$.3 -$.1 -$ $16. -$18. -$1. -$.6 $2.3 -$.2 $.3 $.3 -$1. Aluminium $1.2 $1.1-1% -% % % 1% -3 Agriculture ETPs Flows Analysis AGRICULTURE Agriculture Agri Basket Wheat Corn Soybeans Cotton Coffee Sugar Soybean Oil Cocoa Past Month Flows in Agricultural ETPs AGRICULTURE $17. Agri Basket $4.7 Wheat -$6.9 $1.1 Corn $.9 Soybeans $6. Cotton-$.1 -$.3 Coffee Sugar -$. $9.2 $7.6 Soybean Oil -$.1 -$.1 Cocoa -$.1 $1. $4.2 $2.8 $. Net Cumulative Flows into Agriculture 1, 1,3 1, % -% % % 1% Sugar -

6 6 Livestock ETPs Flows Analysis LI VESTOCK Livestock Livestock Baske Lean Hogs Live Cattle Past Month Flows in Livestock ETPs LIVESTOCK Livestock Basket -$. -$.6 $.2 Lean Hogs $. $.2 Live Cattle $. Net Cumulative Flows into Livestock Live Cattle -.2-1% -% % % 1% Equity ETPs Flows Analysis EQUITIES Region EQUITIES Past Month Flows in Equity ETPs -$.3 $1.7 US.... Europe Asia Australia.... US Europe -$.1 $. $.4 Asia Australia $. -2% % 2% 4% 6% 8% 1% Net Cumulative Flows into Equities Germany

7 7 Currency ETPs Flows Analysis CURRENCIES FX G USD CAD EUR GBP CHF NOK SEK JPY CNY INR AUD NZD Commodity FX n.b. Due to each currency being a pair, there is double counting in the flow data Net Cumulative Flows into Currencies G1 USD CAD EUR GBP CHF NOK SEK JPY CNY INR AUD NZD Commodity FX Past Month Flows in Currency ETPs % -% % % 1% JPY -2.

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