Nitesh Shah Director - Commodity Strategist research@etfsecurities.com 8 May 217 ETF Securities Weekly Flows Analysis ETP investors bargain-hunt as commodities capitulate Oil ETPs continue to see inflows with prices erasing all post-opec deal gains Sharp price declines drive bargain hunting in silver, copper and aluminium ETPs Emerging market bond ETPs see largest outflows since November 216 Weekly Flows by Sector (US$mn) TOTAL Diversified Energy Industrial Metals Precious Metals Agriculture Livestock Equities Bonds FX Top 5 Inflows/Outflows (US$mn) Crude oil Copper Silver Diversified Aluminium Wheat Palladium EM Bonds Gold Industrial metals Top 5 / Bottom 5 Performers Soybean Oil Live Cattle Lean Hogs Wheat Europe Equity Platinum Heating Oil Sugar Crude oil Silver -2% -1% % 1% 2% So urce: ETF Securities No te: s ee next page (*) -5-2 2 6 12 37 2 69-5 5 1-5.4-5.5-7.1-1 1. -1 6.9 37.7 23.5 1 2. 1 1.9 9.4-1 -5 5-3.9% -4.7 % -5.1 % -5.7 % -6.6% 3.7 % 3.4% 3.1 % 2.3% 2.2% Crude oil ETPs saw the third consecutive week of inflows as prices drop 6.3%. As US inventories fail to decline in line with seasonal trends and US production continues to expand, oil prices have given back almost all of their gains since OPEC reached a deal to cut production in November 216. Despite Saudi Arabia s strong push to extend the deal for another six months at least, the market remains unconvinced with OPEC s strategy. Net speculative long positions in Nymex oil futures are down by close to a third since a peak in February 217. However, ETP investors sensed another buying opportunity with US$39.5mn long oil ETPs inflows. Strong inflows into copper and aluminium ETPs despite sharp price declines. Metal prices fell as the market began to price in a June Fed rate as a near certainty and doubts about China s growth story resurfaced. Copper fell 2.6%, while aluminium declined a modest.5%. Although investors in broad industrial metal baskets cut their investments by US$16.9mn (the highest outflows since December 216), more discriminating ETP investors - focused on individual metal fundamentals - saw the recent price dip as a good buying opportunity. Inflows of US$23.mn in to long copper ETPs marked the highest creations since March 217, while inflows of US$9.4mn into long aluminium ETPs were the highest since July 216. Copper is likely to remain in a supply deficit in 217 and 218 which will mark nine straight years of supply falling short of demand. Aluminium supply meanwhile should tighten significantly if China follows through with capacity constraint in winter months amid environmental concerns from smelting activity. Inflows into silver ETPs rise to highest since December 216. US$12.5mn into long silver ETPs contrasts the US$11.2mn outflows from gold ETPs last week. Both metal prices fell hard after the Fed meeting which investors interpreted as a confirmation of a rate hike in June. However, silver appears cheap relative to gold, with the gold-to-silver ratio rising to 75 from 68 last month which has presented a buying opportunity. Moreover, after gold almost hit our fair value estimate of US$13/oz a few weeks ago, we expect it to decline to US$123 by year-end. However, we estimate silver s fair value to be close to US$2/oz by year end, offering more than a 2% upside to investors from current levels. Supply deficits, growing industrial demand and a tightening in exchange inventory provide upside potential. US$7.1mn outflow from emerging market bonds. Investors took profit on their emerging market bond ETP holdings, amid the pressure of declining commodity prices and rising US yields (potentially narrowing yield differentials). Outflows were at their highest since November 216 after YTD gains of 6.6% in EM bonds. Note: All flow and data in this report are based on ETF Securities ETP numbers to 5 May 217 and are denominated in USD unless otherwise indicated. Investments may go up or down in value and you may lose some or all of the amount invested. Past performance does not guarantee future results.
2 ETF Securities ETF Securities Commodity ETP Flow Trends ETP FLOWS (in US$m) ASSETS TOTAL 69.1 123.9 1,429.6 3,49.5 21,637 Diversified 11.9 13. 148.9 414.4 1,155 Precious Metals -5.1-51.2 43.6 2,144.8 15,8 PERFORMANCE (US$) Basket 2.4 15.3 35.8 157.7 48-3.9% -4.7% 4.5% -7.8% Gold -11. -8.7 466.3 1,967.8 12,132-3.% -3.1% 5.8% -5.1% Silver 12. 21.8 25.1 146.7 1,39-6.6% -11.6%.% -6.5% Platinum -2.9-4. 31.1 6.1 834-3.9% -6.%.1% -15.6% Palladium -5.5-3.7-127.7-187.6 324-1.8%.3% 19.5% 33.3% Energy 36.9 77.3 229.1-15.3 1,734 Basket -2.3 3. -11.4-92.9 65-3.8% -9.4% -17.4% -3.6% Crude oil 37.7 73.6 213.1-64.7 1,528-5.7% -11.6% -16.% -5.7% Natural Gas.5 -.6 25.8 6.8 17 -.1% -1.7% -16.9% 1.9% Heating Oil.1.2. 1.6 4.7-4.7% -12.2% -18.7% -3.7% Gasoline.9 1.1 1.7 -.9 28-2.9% -13.5% -22.3% -1.% Carbon... -.3.7 1.1% -3.2% -27.9% -26.6% Industrial Metals 2.2 16. 181.7 274.2 869 Basket -16.9-26.6 86.6 129.9 32-2.1% -5.1% 1.4% 15.8% Aluminium 9.4 2.8 14.4 2.4 123 -.5% -3.2% 11.1% 15.5% Copper 23.5 31. 7.8 96.3 27-3.% -5.1% -.3% 14.% Nickel 3.2 11.1 23.6 28.6 126-3.3% -1.4% -9.6% -1.8% Zinc.1-1.1-12.5-1.4 21-1.6% -4.% -.5% 33.5% Tin.5-1.8.6 -.5 4.8-1.6% -3.3% -7.4% 12.6% Lead.4.6-1.9.8 3.3-3.1% -3.2% 7.9% 21.8% Agriculture -2.3 24.6 11.1 172.8 719 Basket -.6-19.5-1.2-14.9 271.9%.4% -3.7% -7.8% Wheat -5.4-1.3 1.4 85.5 15 2.3% 1.2% 2.1% -2.1% Corn.8-2.8.2 26.3 61 1.2% 1.1% 1.1% -12.1% Soybeans..4-1.7 4.3 14 1.7% 2.1% -5.3% -8.7% Cotton.3.9 5.6 3.8 17-1.4% 3.8% 6.% 19.1% Coffee -1.7 11.3 24. -1.1 84 1.7% -4.7% -4.3% -1.4% Sugar.3 5.6 12.3-9.2 35-5.1% -8.7% -21.6% -6.4% Soybean Oil..4 -.1 -.1 3.6 3.7% 3.2% -6.7% -6.1% Cocoa 3.9 29.5 69.6 87.1 83 1.4% -7.8% -14.1% -39.4% Livestock -.2..1-2. 12 Basket...7-1.7 2.8 3.3% 11.6% 12.3% 5.4% Lean Hogs.2.4 -.4 -.1 6.6 3.1% 4.9% -4.1% -14.4% Live Cattle -.5 -.5 -.2 -.2 2.2 3.4% 14.7% 21.3% 17.4% Equities 5.8 18.7 341.7 575.9 1,186 Global 2.7 2.1 34.3 475.6 72.9% 2.8% 9.6% 18.4% US -.5-2. 18.6 55.1 11.7% 1.9% 7.9% 19.1% Europe 1. -1.2 -.9 4.1 288 2.2% 3.1% 9.4% 21.3% Asia 1.3 1.3 1.6 13.6 34-1.9% -5.4%.6%.1% Australia 1.3.5 18. 27.5 34.8-1.4% -.6% 3.8% 14.1% Bonds 1.8 12.1 6.7 13.5 436 Global 8.8 8.8-3.8 23.6 9 -.2%.5% 2.1% -1.% Europe.. -5.4-5.9 24 -.1% -.2% -.6%.% Emerging Markets -7.1 3.3 69.9 112.7 322 -.1% 1.1% 6.5% 7.% FX.2 13.5-73.2-69.6 446 G1. 1.6 4.5 5.4 6.3 USD 1.2 23.2-85.2-78.7 325 -.4% -2.5% -3.5% 5.1% CAD.2.2 -.2 -.8 3.2 -.2% -2.5% -2.3% -4.8% EUR.7 7.4-89.8-38.7 335.5% 2.1% 1.3%.1% GBP -.2-5. 14.9-32.1 15 -.4% 2.6% 2.1% -7.8% CHF -1.5-1. -2.7-5.5 12.1.2% -.9% -.6% 2.4% NOK.3.6.1-1.5 7.9 -.9% -2.4% -3.3%.5% SEK..8 2. 3.3 9.4.3%.3% -.3% -3.4% JPY -.2-3.5-9.2 1.9 45-1.4% -3.% 2.2% -3.2% CNY.. -.3-34.8 3.7 -.1% -.9% -2.6% -3.9% INR.. -.1 -.1.7 -.5% -1.4% 2.8% 6.7% AUD.1 -.7 -.7-2.6 7.9 -.9% -1.9%.% 4.6% NZD -.2 -.2 -.1.4 1.6.1% -1.5% -3.6% 2.7% Commodity FX. 11.7 19.9 2.1 2.6 (*) All data as at 5 May 17, 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 ETF Securities Net Cumulative Flows by Asset Classes over the past year Com modities 3,5 3, 2,5 2, 1,5 1, 5-5 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Bonds 16 14 12 1 8 6 4 2 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Equities 7 6 5 4 3 2 1 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Currencies 2 15 1 5-5 -1 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 All Commodity ETPs Flows Analysis DIVERSIFIED FLOWS Diversified 11.9 13. 148.9 414.4 1,155 All Commodities 9.3 1.4 126.2 38.5 1,52 Ex-Energy.3.3.4.5 1 Ex-Ags and Liv 2.3 2.3 22.2 33.4 12 Past Month Flows in Diversified ETPs DIVERSIFIED All Commodities $. $12.8 $1.4 $.3 Ex-Energy Ex-Agriculture and Livestock $2.3 1,6 1,4 1,2 1, 8 6 Net Cumulative Flows into Diversified Commodities 4 212 213 214 215 216 217-2% % 2% 4% 6% 8% 1% 45 4 All Commodities 35 3 25 2 15 1 5
4 ETF Securities Energy ETPs Flows Analysis ENERGY FLOWS Energy 36.9 77.3 229.1-15.3 1,734 Energy Basket -2.3 3. -11.4-92.9 65 Crude oil 37.7 73.6 213.1-64.7 1,528 Natural Gas.5 -.6 25.8 6.8 17 Heating Oil.1.2. 1.6 5 Gasoline.9 1.1 1.7 -.9 28 Carbon... -.3 1 Past Month Flows Trends in Energy ETPs ENERGY Energy Basket Crude oil -$3.5 -$3.1 $8.8 $3. $76.8 Natural Gas -$.3 -$.3 Heating Oil Gasoline -$.1 $.3 $1. Carbon $. $.1 Net Cumulative Flows into Energy 5, 4,5 4, 3,5 3, 2,5 2, 1,5 212 213 214 215 216 217-1% -5% % 5% 1% -5-1 -15-2 Crude oil -25-3 -35-4 -45 Precious Metals ETPs Flows Analysis PRECIOUS METALS FLOWS Precious Metals -5.1-51.2 43.6 2,144.8 15,8 PM Basket 2.4 15.3 35.8 157.7 48 Gold -11. -8.7 466.3 1,967.8 12,132 Silver 12. 21.8 25.1 146.7 1,39 Platinum -2.9-4. 31.1 6.1 834 Palladium -5.5-3.7-127.7-187.6 324 Past Month Flows in Precious Metals ETPs PRECIOUS METALS -$5.8 -$.4 PM Basket $15.3 Gold -$8.8 Silver -$.1 $22. Platinum Palladium -$3.6 -$3.7 Net Cumulative Flows into Precious Metals 16, 15, 14, 13, 12, 11, 1, 9, 8, 212 213 214 215 216 217-1% -5% % 5% 1% 2,5 Gold 2, 1,5 1, 5
5 ETF Securities Industrial Metals ETPs Flows Analysis INDUSTRIAL META FLOWS Industrial Metals 2.2 16. 181.7 274.2 869 IM Basket -16.9-26.6 86.6 129.9 32 Aluminium 9.4 2.8 14.4 2.4 123 Copper 23.5 31. 7.8 96.3 27 Nickel 3.2 11.1 23.6 28.6 126 Zinc.1-1.1-12.5-1.4 21 Tin.5-1.8.6 -.5 5 Lead.4.6-1.9.8 3 Past Month Flows in Industrial Metals ETPs INDUSTRIAL METALS -$.5 $16.5 IM Basket -$26.8 $.1 Aluminium Copper Nickel -$.7 $. $2.8 $31.7 $11.1 Zinc -$1.1 $. Tin -$1.8 1,4 1,3 1,2 1,1 1, 9 8 7 Net Cumulative Flows into Industrial Metals 6 212 213 214 215 216 217-1% -5% % 5% 1% 1 Copper 8 6 4 2-2 -4 Agriculture ETPs Flows Analysis AGRICULTURE FLOWS Agriculture -2.3 24.6 11.1 172.8 719 Agri Basket -.6-19.5-1.2-14.9 271 Wheat -5.4-1.3 1.4 85.5 15 Corn.8-2.8.2 26.3 61 Soybeans..4-1.7 4.3 14 Cotton.3.9 5.6 3.8 17 Coffee -1.7 11.3 24. -1.1 84 Sugar.3 5.6 12.3-9.2 35 Soybean Oil..4 -.1 -.1 4 Cocoa 3.9 29.5 69.6 87.1 83 1,5 1,3 1,1 9 7 5 Net Cumulative Flows into Agriculture 3 212 213 214 215 216 217 AGRICULTURE Agri Basket Wheat Corn Soybeans Cotton Coffee Sugar Soybean Oil Past Month Flows in Agricultural ETPs Cocoa -$19.5 -$.8 -$3.1 -$1.4 -$.4 -$.1 $. $.3 -$.9 -$.6 $26. $.5 $.9 $12.2 $6.2 $.3 $29.5 1 9 Cocoa 8 7 6 5 4 3 2 1-1 $.1 $. $.1-1% -5% % 5% 1%
6 ETF Securities Livestock ETPs Flows Analysis LIVESTOCK FLOWS Livestock -.2..1-2. 12 Livestock Basket...7-1.7 3 Lean Hogs.2.4 -.4 -.1 7 Live Cattle -.5 -.5 -.2 -.2 2 Past Month Flows in Livestock ETPs LIVESTOCK -$.7 $.7 Livestock Basket $. Lean Hogs $. $.5 Live Cattle -$.7 $.2 Net Cumulative Flows into Livestock 15 14 13 12 11 1 9 8 7 6 5 212 213 214 215 216 217-1% -5% % 5% 1% 1.5 Live Cattle 1..5. -.5-1. Equity ETPs Flows Analysis EQUITIES FLOWS Region 5.8 18.7 341.7 575.9 1,186 Global 2.7 2.1 34.3 475.6 72 US -.5-2. 18.6 55.1 11 Europe 1. -1.2 -.9 4.1 288 Asia 1.3 1.3 1.6 13.6 34 Australia 1.3.5 18. 27.5 35 Themes 1.7 17.1 317.1 57.2 796 Small Cap...1 9.5 42 MLP -1. -3. 12.7 22.1 34 Gold Miners.. 11.6 7.5 98 Robo. 11. 221.7 355.8 459 Cyber 2.7 9.1 71. 112.3 163 Past Month Flows in Equity ETPs EQUITIES Global US $12.9 $2.1 -$2. $5.8 Europe Asia -$6.9 $5.8 Australia $.5-1% -5% % 5% 1% Net Cumulative Flows into Equities 1,6 1,4 1,2 1, 8 6 4 212 213 214 215 216 217 4. 35. Robo 3. 25. 2. 15. 1. 5..
7 ETF Securities Bond ETPs Flows Analysis BONDS FLOWS Bonds 1.8 12.1 6.7 13.5 436 Global 8.8 8.8-3.8 23.6 9 Europe.. -5.4-5.9 24 Emerging Markets -7.1 3.3 69.9 112.7 322 Government -2.5 7.8 71.6 13.5 361 Corporate 4.3 4.3-1.9 -.1 75 Past Month Flows in Bond ETPs BONDS $12.1 Global Europe Emerging Markets $3.3 % 2% 4% 6% 8% 1% Net Cumulative Flows into Bonds 5 45 4 35 3 25 2 15 1 5 215 216 217 16 14 Emerging Markets 12 1 8 6 4 2 Currency ETPs Flows Analysis CURRENCIES FLOWS FX.2 13.5-73.2-69.6 446 G1. 1.6 4.5 5.4 6 USD 1.2 23.2-85.2-78.7 325 CAD.2.2 -.2 -.8 3 EUR.7 7.4-89.8-38.7 335 GBP -.2-5. 14.9-32.1 15 CHF -1.5-1. -2.7-5.5 12 NOK.3.6.1-1.5 8 SEK..8 2. 3.3 9 JPY -.2-3.5-9.2 1.9 45 CNY.. -.3-34.8 4 INR.. -.1 -.1 1 AUD.1 -.7 -.7-2.6 8 NZD -.2 -.2 -.1.4 2 Commodity FX. 11.7 19.9 2.1 21 n.b. Due to each currency being a pair, there is double counting in the flow data 65 6 55 5 45 4 35 3 25 Net Cumulative Flows into Currencies 2 212 213 214 215 216 217 G1 USD CAD EUR GBP -$1.8 CHF-$.1 NOK SEK JPY CNY INR AUD NZD Commodity FX 2.. -2. -4. -6. -8. -1. -12. -14. Past Month Flows in Currency ETPs -$9.9 -$3.8 -$3.2 -$.9 -$5.2 -$3.9 $.3 $.3 $. $1.7 $28.4 $11.4 $.2 $.6 $. $. $. -1% -5% % 5% 1% USD -16.
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