ETFs: Continuing nervousness, extremely high turnover
The Ukraine war continues to put pressure on the stock markets, especially in Europe. Equity index trackers from all regions are sold. By contrast, Russia trackers are in demand among retail investors. Inflation continues to worry investors.
1 March 2022. Frankfurt (Börse Frankfurt). The war in Ukraine continues to weigh on stock markets worldwide. Since the beginning of the invasion, the DAX has at times lost around 700 points. With the start of the sanctions, prices fell further, but recovered somewhat from the low of just under 14,000. Currently, the DAX is about 2 percent lower at 14,150 on Tuesday.
High inflation remains a serious issue
Investors now fear that trade with Russia could come to a standstill in many areas after major Russian financial institutions were excluded from the international SWIFT system, commented Cornelia Steinheuer-Zorz of Commerzbank in the morning. In addition, further increases in commodity prices are likely to fuel already high inflation.
"The fact that stock markets are holding so steady at the moment despite the war is probably also due to the fact that, after the turnaround in monetary policy long ago, the coffers of fiscal policy are just opening wide again in response to security policy and foreign policy with higher defense spending," said Jochen Stanzl, chief market analyst at CMC Markets , assessing the development.
"February was a bifurcated month," said Henry Allen and Jim Reid of Deutsche Bank, summing up the action in light of losses of 7 percent in the DAX and EURO STOXX 50, 3.8 percent in the S&P 500 and just over 4 percent in the Nasdaq Composite. If the first half was dominated by the growing view that the U.S. Federal Reserve (FED) would embark on more aggressive monetary tightening, the second half was dominated by a significant decline in risk appetite, triggered first by warnings of and eventually the reality of the Russian invasion of Ukraine. Equities therefore performed the weakest in February.
Functioning trading at all times with very high turnovers
"Trading has worked at all times - that's a good sign for ETFs, too," reports Frank Mohr of Société Générale. Turnover has been extremely high since the invasion began, he said. "But there is no panic at all, although sales are predominant.
Mohr
Torben Bendt of Lang & Schwarz also reports very high turnover and great nervousness. "The mood is depressed, we see a lot of selling."
Leveraged short products to hedge
Mohr reports overwhelming selling in equity index trackers of almost all regions. "We are seeing outflows primarily in European and global index trackers," he reports. For example, the iShares Core FTSE 100 (IE0005042456), UBS ETF (LU) MSCI EMU |(LU0147308422) and iShares Core MSCI World (IE00B4L5Y983) top the sell lists. According to Mohr, Europe's proximity to the crisis area probably played an important role here: U.S. trackers, on the other hand, were less in focus.
Bendt confirmed the ongoing trend toward leveraged short products. "They are bought for hedging." Bendt recorded particularly high turnover in a double-leveraged DAX short tracker: Xtrackers ShortDAX x2 Daily Swap (< LU0411075020>).
Russia ETFs bought - some investors active
Regionally, Russia is heavily traded, he said. "We have more purchases than sales here, including today," reports Bendt, looking at the order books. Once again, the iShares MSCI Russia ADR/GDR (<IE00B5V87390>) dominated here, followed by purchases in the Lyxor MSCI Russia (LU1923627092).
Russia ETFs also dominate Mohr's order books from a regional perspective: Russia ETFs were bought right from the start of the invasion. The volume, however, points to private retail investors* rather than institutional players, he said. "With the price collapse of the underlying assets, spreads are now widening; however, the products are still tradable.
Sectors: Technology ahead on sell lists
Technology stocks continue to be among the predominantly beleaguered sectors. At Mohr, the energy sector is also on the sell side in the order books, although there would be arguments for both sides. However, oil trackers are starting to run hot. In contrast, trading in financial ETFs is balanced. Aerospace & Defends trackers are more in demand than usual.
Bendt, however, registered purchases in the energy sector. Here, the Lyxor MSCI New Energy ESG Filtered (FR0010524777) and iShares S&P Global Clean Energy (IE00B1XNHC34) stand out.
Oil- brisk trading
The continued rise in oil prices to 2014 levels continues to see brisk trading. Bendt's clients* are primarily buying the WisdomTree WTI Crude Oil 2x Daily Leveraged (<DE000A2BDEB6>).
Cryptos
In the previous week cryptocurrencies were not a safe haven, now prices are rising. Bitcoin is back above $43,000. It benefits from the fact that it is decentralized, judges Stanzl. But this also poses a reputational risk for the still young industry, he says: "No one wants cryptocurrencies to get the reputation of being used as a loophole against sanctions in a tense and threatening scenario for the world like the current one." Bendt, however, is making out much quieter trading than usual in cryptocurrencies - as he has in the past two weeks.
Fixed income: balanced trading in both government and corporate stocks
While there had been a veritable flight to bonds in recent days, buying and selling is now balanced, reports Mohr: European high yield corporate bonds, on the other hand, are attracting interest: iShares EUR High Yield Corporate Bond (IE00B66F4759). However, Société Générale's clients also bought floating rate ETFs - such as Amundi Floating Rate Euro Corporate ESG (LU1681041114).
At Lang & Schwarz, an Ekosem-Agrar bond with a coupon of 8.5 percent and a maturity of 12/December 2022 (DE000A1R0RZ5) is heavily traded and stands out, he said. "Here, people are speculating with small quantities," Bendt refers to the purchases by small investors.
| Shares | |
| USA | Sales |
| World | Sales |
| Europe | Sales |
| Emerging Markets | Sales |
| Industries | |
| Energy | Sales |
| Finance | Sales |
| Technology | Sales |
| Fixed Income | |
| Government bonds | Sales |
| Corporate Bonds | Sales |
| European corporate bonds high-yield. | Buys |
| Floater | Buys |
by Antje Erhard 1 March 2022, © Deutsche Börse AG
Deutsche Börse 
