For a long time they were in the shadows, but now they are making a comeback: Emerging market ETFs are back in demand. But Europe's equities are also attracting more attention again. ESG and thematic ETFs remain popular.
13 December 2022. Frankfurt (Börse Frankfurt). The small skid marks after the weeks-long rally on the stock market cannot affect the buying mood on the ETF market. Traders report a clear buyer overhang. "We have about twice as many purchases as sales," reports Holger Heinrich from Baader Bank. U.S. and global equities continue to be the most popular - often with ESG filters. "S&P 500 ETFs in particular are in demand," explains Torben Bendt of Lang & Schwarz. According to Heinrich, the Invesco S&P 500 ESG (IE000QF66PE6), the CSIF MSCI USA Small Cap ESG Leaders Blue (IE00BMDX0L03) and the classic UBS S&P 500 (IE00B7K93397) are popular.
"Unlike previous months, however, we are also seeing more trading in European equities again," explains Frank Mohr of Societé Générale, referring to the large Euro Stoxx and DAX trackers from iShares (DE0005933956, DE0005933931). "However, sales are slightly outweighing." Again, Heinrich is registering interest mainly in sustainable products, such as the UBS MSCI Europe Socially Responsible (< LU2206598109>).
As far as overall turnover is concerned, assessments differ: Mohr reports above-average turnover, Heinrich declining trading volume. The DAX had lost last week, but is now recovering and stands at 14,416 points at midday on Tuesday.
Mohr
China's 180-degree turnaround: ETFs in demand
Back on the radar: emerging markets. "After a long time, we are observing interest in emerging market ETFs again," reports Mohr. This is likely to have to do primarily with China's departure from its rigid Corona measures. The CSI 300, which tracks price performance on the two mainland stock exchanges Shanghai and Shenzhen, has recovered significantly since its low at the end of October. The MSCI Emerging Markets index is also pointing upwards again.
China's shares leading the way. The list of the top 15 performers in the German ETF market in November includes 13 products that track the Chinese equity market, Morningstar reports. "The backdrop is the recovery of capital markets in the second half of November amid investor hopes that China will ease its zero-covid policy," writes Morningstar analyst Antje Schiffer. Among the best-performing ETFs are HSBC Hang Seng Tech (IE00BMWXKN31), Deka MSCI China ex A Shares (DE000ETFL326) and UBS Solactive China Technology (LU2265794276). However, the losses this year are far from recouped.
Real estate ETFs: Popular despite rising interest rates
As far as trading in sector ETFs is concerned, according to Mohr, energy. Technology, Real Estate and Basic Materials ETFs are the main focus. Energy is dominated by inflows (IE00B42NKQ00), as are real estate (IE00B0M63284) and basic materials. "Purchases in the real estate sector relate to all regions, i.e., Europe, the U.K. and the U.S.," specifies Mohr. "At the same time, the forecasts for the real estate sector are not good because of rising interest rates." In the basic materials sector, Lyxor NYSE Arca Gold BUGS (<LU0488317701>) is among the favorites. Buys and sells alike are reported by Mohr for technology ETFs, with a slight buy overhang for the iShares TecDAX (DE0005933972) and a slight sell overhang for the Amundi Stoxx Global Artificial Intelligence (LU1861132840). Baader Bank clients* like medical technology and cloud computing (IE00BMH5YF48).
Torben Bendt of Lang & Schwarz reports continued high turnover in leveraged gas ETCs such as WisdomTree Natural Gas 3x Daily Leveraged (IE00BLRPRG98) and its short variant, WisdomTree Natural Gas 3x Daily Short (IE00B76BRD76). "There's some buying, some selling."
Cyber security, hydrogen - participating in big trends
Interest also remains high in certain theme funds that focus on growth trends regardless of sector. A perennial favorite is iShares Global Clean Energy (IE00B1XNHC34), which is worth 5.6 billion euros. "That one is always in demand," Mohr explains. He also sees a lot of buying in L&G Hydrogen Economy (IE00BMYDM794), which tracks stocks in the hydrogen economy. Inflows and outflows alike are seen in WisdomTree Cybersecurity (IE00BLPK3577), he adds.
Corporates sought after
Trading in bond ETFs is somewhat quieter. According to Mohr, European corporate bonds with SRI filters (LU1437018168, LU1737653987) and without (IE00B3F81R35) are on the buying lists, while Xtrackers II Eurozone Government Bond Short Daily Swap (LU0321463258) is on the selling lists. This inversely tracks European government bond prices and thus benefits from rising interest rates. "This is probably profit-taking after the sharp rise in interest rates," notes Mohr.
Equities | |
USA | purchases |
World | purchases |
DAX/Euro Stoxx | sales |
Emerging Markets | purchases |
Industries | |
Energy | purchases |
Real Estate | purchases |
Themes | |
Green Energy | purchases |
Hydrogen | purchases |
Cyber Security | purchases/sales |
from: Anna-Maria Borse, 13 December 2022, © Deutsche Börse AG
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
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Borse