ETFs: "Nobody is panicking"
Despite the change of mood on the stock market, there is no talk of a wave of selling in the ETF market. Global trackers in particular remain in demand. However, utilities and energy stocks are currently the big sellers.
23 August 2022 Frankfurt (Börse Frankfurt). The summer mood on the stock market is gone. Last Wednesday came the turning point. The DAX had previously risen to 13,920 points, then it went down sharply, and by midday on Tuesday the index was only at 13,240 points. "The economic worries, high inflation and central bank policy are making themselves felt again," explains Jan Duisberg of ICF Bank.
Selling also predominates in the ETF market, as Frank Mohr of Société Générale reports - but at a low level. "It is very quiet overall." Duisberg confirms this: "The price decline has not triggered any waves of selling, no one has panicked." Turnover has remained extremely low.
US and global equities as favourites
Turnover in global and US portfolios continues to dominate, as Mohr notes. "Trackers of European equities are falling further and further behind and accounted for only 6 per cent of turnover last week." For world ETfs, he reports mostly buying, for example for the HSBC MSCI World (IE00B4X9L533) and the Lyxor MSCI World (<LU0392494562>). Duisberg also reports brisk trading in MSCI World ETFs, such as those from Invesco (IE00B60SX394).
However, Torben Bendt of Lang & Schwarz also sees continued interest in the iShares Stoxx Europe 600 (<DE000263530>). In addition, leveraged Nasdaq ETNs are trading briskly again, specifically the WisdomTree Nasdaq 100 3x Daily Leveraged (IE00BLRPRL42) and the WisdomTree Nasdaq 100 3x Daily Short (IE00BLRPRJ20). These reflect the Nasdaq 100 performance with leverage 3, in the second case inversely. The Nasdaq 100 has risen strongly since mid-June, but since mid-August it has been going down again.
European growth stocks are also currently popular with ICF Bank clients, for example with the Deka Stoxx Europe Strong Growth 20 (DE000ETFL037).
Single Stock Tracker
ETFs actually track an index and thus a large number of securities. In the USA, however, there is a new trend: single-stock ETFs. Such ETFs have been on the market there since July, so far for companies such as Tesla, Apple, Coinbase, Nike and Pfizer. Compared to direct investment, they offer the possibility to leverage the investment or sell the security short. ETF provider Roundhill now wants to go further: Roundhill's new ETFs will track stocks that are not actually tradable in the US - specifically Samsung and Saudi Aramco. This is to be implemented via swaps, but also via the purchase of the underlying shares. It is still open whether the US Securities and Exchange Commission (SEC) will approve the ETFs. It is feared that the ETFs will circumvent listing regulations, because foreign companies are not bound by US reporting standards.
In Germany, there can legally be no ETFs on individual shares because a certain taxation is required for funds as special assets. Since April, some ETNs on large international stocks have been available for trading on Xetra, partly with leverage. These include Tesla, Nvidia, Alibaba, Plug Power, Alphabet, Apple and Facebook.
Gas price explosion: Utility and energy stocks in demand
As far as sectors are concerned, the utilities and energy sectors are clearly in focus at the moment. The background to this is the renewed rise in the wholesale price of gas following Gazprom's announcement to interrupt deliveries through the Nord Stream 1 pipeline for three days at the end of August. The Lyxor MSCI World Utilities (<LU0533034558>), for example, is being bought a lot. It reflects the development of global utilities, with a clear focus on the USA with 66 per cent. Since the beginning of the year, the price has risen by 17 per cent. The Lyxor MSCI World Energy (<LU0533032420>) has even increased by 52 per cent since the beginning of the year.
Traders are also reporting strong demand for gas and oil ETCs. As examples, Bendt mentions the WisdomTree Natural Gas 3x Daily Leveraged (<IE00BLRPRG98>) and the WisdomTree Natural Gas 2x Daily Leveraged (<DE000A2BDED2>). These are bets on a rising gas price, with leverage of 3 and 2 respectively. "We don't see so much interest in short products." Also in demand at Lang & Schwarz: the WisdomTree WTI Crude Oil 2x Daily Leveraged (<DE000A2BDEB6>). This one is also seeing a lot of turnover at ICF Bank, Duisberg explains.
Duisberg is also still registering good turnover in VanEck Semiconductor (IE00BMC38736). "This is a niche product."
High yield delivered
In bonds, high yield corporate bonds (IE00B66F4759) are currently on the sell lists, as are inflation-linked bonds such as Lyxor EUR 2-10Y Inflation Expectations (LU1390062245), Mohr observed. "Otherwise, there is no clear trend."
Cryptos: small turnover
According to Duisberg, there is meanwhile a little more going on again in crypto ETNs, such as 21Shares Ethereum (CH0454664027). After the crash, cryptocurrencies had recovered somewhat in July, but are now weakening again. Bitcoin currently costs 21,394 US dollars.
Mohr
| Corporate Bonds | Sells |
| Inflation Linker | Sells |
from: Anna-Maria Borse, 23 August 2022, © Deutsche Börse AG
About the author
Anna-Maria Borse ist Finanz- und Wirtschaftsredakteurin mit den Schwerpunkten Finanzmarkt/Börse und volkswirtschaftliche Themen.
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