ETF Securities Weekly Flows Analysis Investors appear to shrug off trade-war risk for now

Transcription

1 Nitesh Shah Director, Commodities Research 12 March 218 ETF Securities Weekly Flows Analysis Investors appear to shrug off trade-war risk for now Inflows into industrial metal baskets of US$9mn highlights cyclical optimism as investors appear to shrug off threats of a trade-war. Gold ETPs attracted USD14.5mn, marking the first substantial inflow in six weeks. Cocoa rally sparks profit taking. Weekly Flows by Sector (US$mn) TOTAL Diversified Energy Industrial Metals Precious Metals Agriculture Livestock Equities Bonds FX Top 5 Inflows/Outflows (US$mn) Diversified USD Gold Industrial metals Global Equity Crude oil Copper Precious metals Cocoa Agriculture Top 5 / Bottom 5 Performers Carbon Cocoa US Equity Nickel Cotton Soybean Oil Zinc Lead Soybeans Sugar -67-1% -5% % 5% 1% 15% So urce: ETF Securities No te: s ee next page (*) % -2.4% -2.9% -3.% -4.3% 3.6% 3.% 3.% 6.6% 9.7 % Inflows into industrial metal baskets of US$9mn highlights cyclical optimism as investors appear to shrug off threats of a trade-war. Although base metal prices fell last week after the Trump Administration applied tariffs to imports of steel and aluminium in the US, many ETP investors shrugged off the event. The tariffs could tighten the supply of metal coming from China. As a serial overproducer, cutbacks from China would be welcome news and could even increase prices; China is already trying to reduce capacity in steel and aluminium and this should push the country further along in its efforts. The impact on the broader commodity complex will largely depend on the reaction from other countries. If a titfor-tat trade war breaks out, we could see international trade decline and it could be the beginning of a downturn in economic prosperity for many countries, which could hurt cyclically exposed assets. The softening of rhetoric from the US by the end of the week could mean that other countries refrain from strong reciprocal measures, which could lower the risk of a severe escalation of a trade war. Gold ETPs attracted USD14.5mn, marking the first substantial inflow in six weeks. Rising Treasury yields and a pause in US Dollar weakness has made gold less attractive of late. However, gold s role as hedge to adverse events makes it attractive to investors who are worried about geopolitical events turning ugly. So while investors continued to build positions in cyclical assets (see above), they placed hedges against the threat of a trade war breaking out after the Trump Administration applied tariffs to imports of steel and aluminium in the US by increasing allocations to gold. US$15.9mn of inflows into short USD ETPs. Last week s flows seem to indicate that investors are betting against the temporary reprieve in US Dollar weakness. Most of the flows went into long Japanese Yen, but long Sterling and long Euro were also beneficiaries. Cocoa rally sparks profit taking. Between August 216 and May 217, cocoa ETPs saw close to US$84mn of inflows, when prices fell close to 45% over that period. Investors appeared to be bargain-hunting. Now that cocoa prices are rising once again (+35% since December 217), many investors may be thinking of taking profit. Outflows accelerated last week to US$18.9mn (the highest weekly outflow) as prices rose 6.6% last week alone. Prices are rising after the International Cocoa Organisation (ICCO) said that it expects the surplus in production this year to be lower than last year and indeed revised downward the scale of stock overhang from last year. The presence of Cocoa Swollen Shoot Virus (CSSV) in Cote d Ivoire (the largest cocoa producer) could limit the regions producing capacity in future years as maintenance programmes need to be undertaken to reduce the spread of the virus. The price of cocoa is already reacting. Note: All flow and data in this report are based on ETF Securities ETP numbers to 9 March 218 and are denominated in USD unless otherwise indicated.

2 2 ETF Securities ETF Securities Commodity ETP Flow Trends ETP FLOWS (in US$m) ASSETS TOTAL , ,121 Diversified ,32 PERFORMANCE (US$) Precious Metals ,87 Basket % 1.1% -.2% 4.9% Gold , %.5% 1.8% 9.4% Silver ,379.2%.8% -2.3% -2.9% Platinum % -2.1% 2.3%.3% Palladium % 1.5% -6.9% 3.2% Energy ,413 Basket % 4.3% -2.2% 9.8% Crude oil , % 4.8% -.8% 26.3% Natural Gas % 4.8% -6.3% -26.1% Heating Oil % 2.3% -7.1% 22.9% Gasoline % 1.6% -4.5% 16.5% Carbon % 21.% 39.% 143.% Industrial Metals ,153 Basket % 1.5% -3.1% 18.5% Aluminium % -.4% -7.1% 9.3% Copper % 2.8% -5.5% 17.2% Nickel % 6.8% 8.3% 36.9% Zinc % -3.2% -1.2% 2.9% Tin % 1.9% 7.2% 12.4% Lead % -6.3% -4.5% 3.2% Agriculture Basket % 3.5% 4.6% -8.1% Wheat % 6.1% 11.6% -8.% Corn % 5.7% 9.1% -6.4% Soybeans % 4.6% 7.% -2.% Cotton % 8.9% 6.1% 9.8% Coffee % -3.% -6.3% -23.3% Sugar % -5.3% -14.9% -32.8% Soybean Oil % -1.7% -5.5% -7.1% Cocoa % 19.5% 28.4% 23.6% Livestock Basket % -.9% -3.4% 2.1% Lean Hogs % -1.8% -9.8% -5.1% Live Cattle % -.5% -.4% 5.5% Equities , ,571 Global ,97.7 2, 2.8% 5.1% 2.7% 2.2% US % 6.6% 4.6% 19.8% Europe % 1.9% -4.5%.4% Asia % 7.1% 2.4% 18.7% Australia % 3.3% -.5% 8.9% Bonds Global %.%.% 5.2% Europe %.4% -.2% 2.4% Emerging Markets %.8% 2.4% 13.2% FX G USD % -.4% -2.2% -11.% CAD % -2.7% -3.8% 2.% EUR %.2% 1.2% 8.7% GBP % -.1%.5% 3.6% CHF % -1.5%.2% -5.9% NOK % 1.6% 2.5% -2.% SEK % -2.7% -3.3% -3.2% JPY % 2.4% 5.% 2.3% CNY % -1.1% 1.% 2.7% INR % -1.5% -3.7% -5.% AUD % -1.1% -3.2% -4.1% NZD %.3%.6% -1.6% Commodity FX (*) All data as at 9 Mar 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

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4 4 ETF Securities Net Cumulative Flows by Asset Classes over the past year 1, Com modities 1,2 Equities 8 1, Mar 17 Jun 17 Sep 17 Dec 17 Mar 18 Bonds Mar 17 Jun 17 Sep 17 Dec 17 Mar 18 Mar 17 Jun 17 Sep 17 Dec 17 Mar 18 Currencies Mar 17 Jun 17 Sep 17 Dec 17 Mar 18 All Commodity ETPs Flows Analysis DIVERSIFIED Diversified ,32 All Commodities ,27 Ex-Energy Ex-Ags and Liv Past Month Flows in Diversified ETPs DIVERSIFIED $166.8 All Commodities $164.4 Ex-Energy Ex-Agriculture and Livestock $2.4 1,8 Net Cumulative Flows into Diversified Commodities 15 % 2% 4% 6% 8% 1% 1,6 1,4 1,2 1, 1 5 All Commodities

5 5 ETF Securities Energy ETPs Flows Analysis ENERGY Energy ,413 Energy Basket Crude oil ,215 Natural Gas Heating Oil Gasoline Carbon , 4,5 4, 3,5 3, 2,5 2, Net Cumulative Flows into Energy 1, Past Month Flows Trends in Energy ETPs ENERGY Energy Basket Crude oil Natural Gas Heating Oil Gasoline Carbon % -5% % 5% 1% Gasoline Precious Metals ETPs Flows Analysis PRECIOUS METALS Precious Metals ,87 PM Basket Gold ,612 Silver ,379 Platinum Palladium Past Month Flows in Precious Metals ETPs PRECIOUS METALS -$19.4 $.4 PM Basket $7.4 Gold -$.2 -$25.3 Silver $22. $.4 Platinum -$24.9 $.2 Palladium $1.5 Net Cumulative Flows into Precious Metals 16, 15, 14, 13, 12, 11, 1, 9, 8, % -5% % 5% 1% Gold

6 6 ETF Securities Industrial Metals ETPs Flows Analysis INDUSTRIAL META Industrial Metals ,153 IM Basket Aluminium Copper Nickel Zinc Tin Lead Past Month Flows in Industrial Metals ETPs INDUSTRIAL METALS IM Basket -$.1 $78.9 $39.9 Aluminium Copper -$1.3 -$27. $. $.1 Nickel $79.2 Zinc Tin -$2.1 -$.4 $.3 $. $.9 $.6 1,5 1,4 1,3 1,2 1,1 1, Net Cumulative Flows into Industrial Metals % -5% % 5% 1% 2 15 Nickel Agriculture ETPs Flows Analysis AGRICULTURE Agriculture Agri Basket Wheat Corn Soybeans Cotton Coffee Sugar Soybean Oil Cocoa ,5 Net Cumulative Flows into Agriculture AGRICULTURE Agri Basket Wheat Corn Soybeans Cotton Coffee Sugar Past Month Flows in Agricultural ETPs -$2.5 -$15.6 -$.1 -$.1 $2.1 $2.9 $1.2 $4.9 $2.7 $13.3 $6.1 $.1 $.2 $.1 Soybean Oil -$.1 $. Cocoa -$34.7 $.5-1% -5% % 5% 1% 6 1,3 1, Sugar

7 7 ETF Securities Livestock ETPs Flows Analysis LIVESTOCK Livestock Livestock Basket Lean Hogs Live Cattle Past Month Flows in Livestock ETPs LIVESTOCK -$.1 $.1 Livestock Basket $. Lean Hogs -$.1 -$.1 Live Cattle $.2 in US$m n Net Cumulative Flows into Livestock in US$m n -1% -5% % 5% 1% Live Cattle Equity ETPs Flows Analysis EQUITIES Region , ,571 Global ,97.7 2, US Europe Asia Australia Themes ,11. 2,9 Small Cap MLP Gold Miners Robo ,348 Cyber Past Month Flows in Equity ETPs EQUITIES Global US Europe Asia Australia $85.5 $59.8 -$3. $26.5 $1.3 $1.9 $1.1-1% -5% % 5% 1% Net Cumulative Flows into Equities 2,9 2,4 1,9 1, Robo

8 8 ETF Securities Bond ETPs Flows Analysis BONDS Bonds Global Europe Emerging Markets Government Corporate Past Month Flows in Bond ETPs BONDS -$9.7 Global $.4 Europe Emerging Markets -$9.7-1% -5% % 5% 1% Net Cumulative Flows into Bonds Global 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 % -5% % 5% 1% JPY.

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