With the recent surge on the stock markets, almost everything is doing well again, even the long maligned Chinese shares. No longer quite so popular: money market trackers.
21 November 2023. FRANKFURT (Börse Frankfurt). Buying mood also on the ETF market - the strong price increase of recent weeks is making itself felt. The DAX stood at 15,940 points at midday on Tuesday - not far from the 16,000 point mark. The trading volume is also good: "We recorded around 20 percent more buys than sells with a further increase in turnover," reports Holger Heinrich from Baader Bank.
Andreas Schröer from Lang & Schwarz reports "the usual business" for ETFs on the major indices, "no more, no less." What is striking, however, is the increased interest in Chinese equities, specifically in the iShares Dow Jones China Offshore 50 (DE000A0F5UE8). "We are seeing significantly more buying." "This could be due to the meeting between US President Biden and China's head of state Xi Jinping or also to a recommendation." China's equities have long been unpopular, and the iShares ETF has already suffered heavy losses in 2021 and 2022. Things don't look good this year either.
US equities remain the top seller
As far as US equities are concerned, according to Heinrich, different S&P 500 variants are particularly popular: on the one hand, classic S&P trackers (IE00BYYW2V44), but also ESG (IE000KXCEXR3) and equal weight counterparts (IE000CXLGK86). "Investors are also focusing on the MSCI USA ESG (IE00BFMNPS42) and the Russell 2000 (LU1681038672)," adds the trader. The small cap index Russell 2000 continues to lag behind large cap indices: while the S&P 500 has gained 19 percent since the beginning of the year, the Russell 2000 has only gained 3 percent. World ETFs are somewhat less in the spotlight, as Heinrich notes. High turnover here: MSCI World ETFs, such as those from UBS with an SRI filter (IE00BK72HH44).
Criticism of the MSCI World: justified or not?
Too heavy on technology and the USA, loss-making from August to October and no longer very interesting anyway in view of the high interest rates - criticism of the MSCI World and the MSCI World ETFs, which have long been propagated as the ideal basic investment, has recently become louder. The ETF portal justETF has looked into the arguments, with a clear result: "A world ETF such as the MSCI World still forms a very good basis for asset accumulation with ETFs," writes justETF analyst Thomas Letsche. In the longer term, the trend is clearly positive. And yes, the index is US and technology-heavy. However, Apple, Microsoft, Alphabet & Co not only have a major influence on the index, but also on the real global economy.
According to Heinrich, the focus in Europe is on EuroStoxx 50 (DE0005933949, DE000ETFL466) and MSCI Europe ETFs, also with an SRI filter (IE000CR424L6, IE00BGDPWW94). Small cap trackers with a focus on sustainability (LU1291101555) and momentum index funds are also in demand here.
Money market trackers with competition
According to Schröer, inflows into money market and money market-related ETFs such as the Xtrackers II EUR Overnight Rate Swap (LU0290358497) are clearly declining. "This is probably due to the rise in fixed deposit interest rates."
Strong turnover in gold ETCs, more calm in crypto ETNs
Lang & Schwarz also continues to register high turnover in gold ETCs, especially in Xetra-Gold (DE000A0S9GB0), in both directions. Crypto ETNs, on the other hand, are somewhat quieter after the significant increase in turnover around two weeks ago. "It is noticeable that cryptocurrencies from the second tier are currently more in demand, such as Solana or Chainlink." Bitcoin's strong rise in the second half of October has not continued, with the cryptocurrency currently trading at 34,110 US dollars. However, this still represents an increase of 120 percent since the beginning of the year. The driver is the hope that a crypto ETF will be approved in the USA in January.
By Anna-Maria Borse, 21 November 2023 © 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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