Global and U.S. equities continue to be at the top of investors' lists, while European equities tend to be at the bottom. Emerging market investments, broadly diversified or specifically in Brazil, are again in demand. Clearly unpopular: US government bonds.
5 April 2022. Frankfurt (Börse Frankfurt). A bit of normality seems to have returned to the markets. At the same time, the bad news from Ukraine continues. Germany now wants to impose further sanctions. Hubert Heuclin of BNP Paribas nevertheless reports continued inflows into equity, but also bond ETFs.
"European equities, as measured by the Euro Stoxx 50, have returned to pre-war levels," the trader notes. U.S. markets had been recouping their losses for some time. Currently, the market is pricing in a cease-fire in the Ukraine war, according to Heuclin. However, he fears disappointment, because the current negotiations - like the previous ones - could remain without success.
MSCI World and U.S. stocks most popular
Global equities are particularly popular, as Heuclin notes, with sustainability variants also popular. The iShares MSCI World ESG Enhanced (IE00BHZPJ569) and the classic iShares Core MSCI World (IE00B4L5Y983) are in demand, he says. Fabian Wörndl of Lang & Schwarz is also seeing a lot of buying of MSCI World ETFs, such as those from HSBC (IE00B4X9L533).
U.S. equities are also doing well, explains Heuclin, both S&P 500 and Nasdaq 100 trackers (IE00B5BMR087, IE0032077012). At Lang & Schwarz, Nasdaq trackers with leverage are trading high - as in previous weeks - specifically WisdomTree Nasdaq 100 3x Daily Leveraged (IE00BLRPRL42) and WisdomTree Nasdaq 100 3x Daily Short (IE00BLRPRJ20). "Meanwhile, long positions predominate," the trader says. The Nasdaq 100 has rallied recently, still down about 10 percent from its all-time high last year, but down more than 20 percent in mid-March. European equities remain on BNP Paribas clients' sell lists, such as Euro Stoxx 50 trackers from Lyxor (FR0007054358) or iShares (DE0005933956).
Brazil Profiting from Scarce Commodities
According to Heuclin, investors are also focusing more on emerging market stocks again, for example with the iShares MSCI Emerging Markets (IE00B0M63177). Wörndl is seeing inflows into the Franklin FTSE Brazil (IE00BHZRQY00). "There is increased buying in that one."
Heuclin
The MSCI Emerging Markets had lost a lot until mid-March, but since then it has been on the rise again. Since the beginning of the year, there has only been a small drop of 4 percent. The Brazilian stock market has even made strong gains: The Franklin FTSE Brazil is up 45 percent this year. As a major exporter of raw materials, Brazil is benefiting from the current energy crisis.
High demand for PAB and CTB ETFs
ESG ETFs based on the EU benchmarks CTB and PAB have also been very well received. Heuclin reports high inflows into the Amundi MSCI World Climate Transition CTB (<LU1602144229>) and the Amundi Index MSCI USA SRI PAB (<LU1861136247>).
PAB and CTB indices and ETFs are based on the EU climate benchmarks PAB ("Paris Aligned") and CTB ("Climate Transition"), which were created in 2019 and with which the EU wants to create a reliable benchmark for investors and make green washing more difficult. Companies included in PAB indices must have at least 50 percent less CO2 intensity in year one compared to the standard indices, while those included in CTB must still have 30 percent. In addition, companies in PAB and CTB must reduce their greenhouse gases by an average of 7 percent year on year. In addition, there are exclusions, which are stricter in the case of PAB.
Bonds: Only no US government bonds
In the bond sector, according to Heuclin, corporate bonds continue to be clear favorites (IE00B3F81R35), while government bonds are being sold off. On the disposal lists are mainly U.S. government bonds, but also Chinese government bonds (IE00BYPC1H27). U.S. Treasuries have recently lost significantly, yields are rising and rising. The yield of the ten-year paper, for example, is currently at 2.45 percent, at the beginning of December it was only 1.38 percent.
In contrast, the BNP trader is registering inflows in emerging market bonds, specifically in the iShares J.P. Morgan USD EM Bond (IE00BYXYYK40) and the iShares J.P. Morgan USD EM Bond EUR Hedged (IE00B9M6RS56). Lang & Schwarz reports increased interest in inflation-linked government bonds, such as the Lyxor EUR 2-10Y Inflation Expectations (LU1390062245)
Crypto ETNs: more trading again
Trading in crypto ETNs has picked up significantly again, Wörndl notes. He reports high turnover for 21Shares' (CH0454664001, CH1114873776) bitcoin and Solana trackers. "There's some buying, some selling, depending on the market situation."
Bitcoin is currently trading at $46,665 - well above the January lows, but well below the all-time high of $68,764 set last November.
Shares | ||
World | Buys | |
USA | Buys | |
Emerging markets | Buys | |
Europe | Buys/Sales | |
Bonds | ||
USA government bonds | Sales | |
China government bonds | Sales | |
EM government bonds | Buys | |
Corporate bonds | Buys | |
Crypto-ETNs |
|
by Anna-Maria Borse, 4 April 2022, © Deutsche Börse AG
[Translate to English:]