ETFs: Falling Prices used for Entry
Despite somewhat weaker equity markets: equity ETFs remain in demand. Recently, however, US equities have not been as well received, but European equities have. MSCI China trackers are also really busy.
October 8 2024 FRANKFURT (Börse Frankfurt). Low prices are entry prices - that seems to be the motto at the moment. “Investors are taking advantage of falling prices and buying into European equities,” reports Heinrich Holger, who trades ETFs for Baader Bank. Heinrich also sees a clear buying overhang overall.
The stock markets are currently trending somewhat weaker after the recent all-time highs. The DAX stands at 19,029 points at midday on Tuesday, well below the record of just under 19,492 points a week and a half ago
China ETF: rise of almost 40 percent
Another big topic: China. “There has been a lot going on in China ETFs for around two weeks,” reports Andreas Schröer from Lang & Schwarz. China's central bank had already announced far-reaching economic measures two weeks ago, which triggered a rally on China's stock markets. However, the further support measures announced by the government today, Tuesday, are causing significant losses.
According to Schröer, the iShares MSCI China (IE00BQT3WG13), but also emerging market ETFs such as the iShares Core MSCI EM (IE00BKM4GZ66), are losing a lot. Since the beginning of the year until today's setback, the iShares MSCI China ETF has risen by 39%, while the emerging markets ETF has risen by 19%.
USA no longer the favorite
Schröer cannot see any anomalies in trading with industrialized country shares. Heinrich from Baader Bank reports about twice as many purchases as sales with increased turnover and inflows into classic MSCI EMU trackers (IE00B53QG562) as well as small cap (LU0671493277) and value ETFs (LU1598690169) for Europe. ETFs with a sustainability filter, such as the Deka MSCI EMU Climate Change ESG (DE000ETFL557), were again sold.
According to Heinrich, US equities were more subdued. “We have seen more selling here.” ESG variants, such as the Xtrackers MSCI USA ESG (IE00BFMNPS42), were also sold here. “World ETFs are being snapped up,” Heinrich also explains. This also applies to ESG ETFs, such as the UBS MSCI ACWI Socially Responsible (IE00BDR55471), the Xtrackers MSCI AC World ESG Screened (IE00BGHQ0G80) and the Franklin Global Equity SRI (IE00BF2B0N83).
September: Emerging markets back
According to Sophia Wurm from issuer SPDR, September was another very good month for the European ETF market with inflows of 23.8 billion US dollars. One reason: the significant price gains on the international stock markets due to the first interest rate cut by the US Federal Reserve. Towards the end of the month, the Chinese central bank's liquidity measures also led to inflows into emerging market equities, as well as into European equities and US small caps. “In addition, non-market capitalization-weighted strategies or 'smart beta' recorded significant inflows,” added Wurm. Bond ETFs recorded purchases of 6.9 billion US dollars. Particularly in demand: European corporate bonds with very good credit ratings, but also emerging market bonds denominated in US dollars.
Armaments ETF: prices higher again
Shares from the defense industry remain popular, as Heinrich also confirms. VanEck Defense (IE000YYE6WK5) has gained 42% this year alone and now manages over USD 1.1 billion. Since the Xetra listing in April 2023, the share price has risen by 75 percent. Also popular with Baader Bank clients: the hydrogen ETF from Global X (IE0002RPS3K2).
Oil ETCs: popular with leverage
The sharp rise in the price of oil in the wake of the escalating conflict in the Middle East has also prompted Lang & Schwarz's trading-savvy clients to bet on the WTI price. “There is more activity here than usual, especially for ETCs with leverage, sometimes long (IE00BMTM6B32), sometimes short (IE00BLRPRK35),” notes Schröer. The WTI price had climbed from 67 to a peak of over 77 US dollars per barrel.
By Anna Maria Borse, October 8 2024, © Deutsche Börse AG
About the Author
Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.
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