The DAX has recovered more than 20 percent since its low at the end of September - more than the Dow Jones and Nasdaq. Nevertheless, the focus is more on U.S. stocks. Chinese shares and semiconductor stocks are recovering somewhat. The crypto sector continues to be battered.
15 November 2022. Frankfurt (Börse Frankfurt). The strong recovery on the stock markets has not yet been able to lure investors out of their shells. "We still see a lot of restraint," reports Leif Österwind of Lang & Schwarz. "Not everyone believes in the year-end rally." Frank Mohr of Société Générale also reports only a slight buyer overhang. "But there is a lot going on, turnover has increased significantly."
The DAX stands at 14,288 points at noon on Tuesday. This means that the index has recovered more than 20 percent since its low for the year at the end of September. The Dow Jones is up only 17 percent, and the Nasdaq 100 is up 11 percent since its recent low.
Still, as far as equity ETFs are concerned, the trend of previous weeks continues. "The music is playing in U.S. and global equities, and again more than usual," Mohr explains. These accounted for 70 percent of turnover last week, he said. Almost all of the top ten products on the turnover list were U.S. and MSCI World ETFs, he said. "That's probably due to the midterm elections in the U.S. and all the news from there."
European equities accounted for only 8 percent of turnover - with inflows and outflows in equal measure, according to Mohr. For German stocks, he reports a small buyer overhang.
China back in focus
China's equities have also recovered somewhat recently, and with them corresponding ETFs. This was triggered by the first tentative steps towards easing the Corona measures. The recently announced package to support the real estate sector also plays a role, as do the easing signals in the relationship between China and the US at the G20 summit in Bali.
Gaining, for example, are iShares MSCI China (IE00BQT3WG13), Lyxor MSCI China (LU1841731745) and Xtrackers CSI300 Swap (LU0779800910). However, Chinese equity ETFs play little role in Société Générale's ETF business, according to Mohr.
Mohr
Buffett fuels interest in semiconductor sector
According to Österwind, the semiconductor sector is very much in demand. "Warren Buffet is getting into Taiwan's chipmaker Taiwan Semiconductor with his investment fund Berkshire Hathaway with several billion U.S. dollars," he explains.
Semiconductor ETFs such as iShares MSCI Global Semiconductors (IE000I8KRLL9), VanEck Semiconductor (IE00BMC38736), and Lyxor MSCI Semiconductor ESG Filtered (LU1900066033) made significant gains. This year, however, the sector is one of the laggards: the sector index underlying the iShares ETF, with the unwieldy name "MSCI ACWI IMI Semiconductors & Semiconductor Equipment ESG Screened Select Capped", is down 40 percent since the beginning of the year, while the market-wide MSCI ACWI IMI is only down 21 percent. Over a three-year period, however, the index for this extremely volatile sector has clearly outperformed the broad market index with 14.7 percent over the year, compared with 4.8 percent.
Topics such as cyber security and clean water are convincing
According to Mohr, the focus is currently on the healthcare, energy, basic materials and technology sectors. Buying dominates everywhere. He registers clear inflows, for example, for the iShares MSCI World Health Care Sector (IE00BJ5JNZ06), the Lyxor NYSE Arca Gold BUGS (<LU0488317701>) and the iShares Gold Producers (IE00B6R52036), both with shares of gold producers, as well as the Invesco KBW Nasdaq Fintech (IE00BYMS5W68).
Some thematic ETFs are also doing well at the moment, Mohr adds, specifically on cyber security, climate and clean water. He cites WisdomTree Cybersecurity (IE00BLPK3577), iClima Smart Energy (<IE00BLCH4S1>), and L&G Clean Water (IE00BK5BC891) as examples.
U.S. government bonds: comeback with yields above 3.5 percent
In the bond ETF business, sustainable corporate floating rate bonds denominated in euros (LU1681041114) are on shopping lists, as are investment grade government bonds denominated in euros (<FR0010754135>), according to Mohr. In contrast, the ComStage Bund Future Short (<LU0530119774>) flew out of the portfolios. With this can be bet on the inverse price development of the Euro Bund Future and thus profit from an interest rate rise.
U.S. government bonds are also very popular at present. The analyst firm Morningstar estimates that in the first nine months of the year, specialized active and passive funds in this asset class collected more than 25 billion euros in Europe - an increase of 55 percent over the previous year. Morningstar's Sara Silano cites two reasons for this: the Russian invasion of Ukraine, with a flight to safe havens, and monetary policy differences between the U.S. and other regions. "With U.S. bond rates returning to levels above 3.5 percent, government bonds can be more than just a source of diversification within portfolios," adds Nicolò Bragazza, senior investment analyst at Morningstar Investment Management. "They also provide returns that, until a year ago, would have been available only by investing in much riskier corporate or high-yield securities." (https://www.morningstar.de/de/news/229252/anleger-sind-zurück-in-us-staatsanleihen-warum.aspx).
Crypto: further price declines expected
According to Österwind, investors* don't want to hear about cryptocurrency ETNs at the moment. "The downward pull continues, positions are being closed out, we do not see new positioning." The crypto exchange FTX, one of the largest on the market, had filed for bankruptcy last week. Over the weekend, reports of mysterious cash outflows at FTX caused additional uncertainty. "The crypto market has had its share of bangs, but never has confidence in the markets been shaken like it is now," commented Morningstar's Madeline Hume. Bitcoin is trading at $16,759 today - up from an all-time high of $68,764 almost exactly a year ago.
Österwind reports high turnover in crypto ETNs with a significant selling overhang. He said 21Shares Bitcoin (CH0454664001), for example, was heavily affected. "Overall, further price declines are expected in the market."
Equitys | |
World | purchases |
USA | purchases |
Europa | purchases /Sales |
China | purchases |
Bonds | |
US-Government bonds | purchases |
Government bonds Europa | purchases |
Floater | purchases |
Industries | |
Semiconductor | purchases |
Health | purchases |
Basic materials | purchases |
Krypto-ETNs | Sales |
from: Anna-Maria Borse, 15 November 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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