The DAX has climbed to new record highs and the Euro Stoxx 50 has reached its highest level since 2007 by cracking a stubborn resistance. Still, U.S.-focused ETFs remain the favorite thing to invest in.
1 August 2023. In a comparatively quiet business even for the summer months, the ratio between purchases and sales in the exchange traded funds (ETF) segment shows an almost balanced picture overall, as Frank Mohr from Société Générale knows to report. Uncertainty about the future development of the economy, corporate profits and stock market prices, which has existed for some time, seems to be holding back many investors in their willingness to invest.
This is probably also due to the apparent contradiction that share prices continue to rise despite the largely pessimistic economic forecasts. The situation is quite extreme in Germany, where in an environment of rising interest rates (actually also rather bad for stock markets), an impending recession is hitting new record highs for the DAX benchmark index.
German and European shares are being sold
This is perhaps one of the reasons why the majority of investors sold ETFs with German and European shares last week. In the case of the DAX ETF from iShares (DE0005933931), there were even "significantly more sales", as Mohr explains. The MSCI Europe ETF from Amundi (LU1861137484) is also being sold more frequently. Possibly investors use the rising prices here for profit taking," suspects the trader, who is active as a market maker for numerous ETF providers.
USA ETFs are being snapped up
However, there is no fundamental skepticism about equity investments. On the other hand, the globally oriented ETFs and several US trackers are still on the shopping lists of customers active in the market. For example, Mohr observed continued strong buying in the S&P 500 ETFs from iShares (IE00B5BMR087) and Vanguard (IE00B3XXRP09). Here, fund assets under management stood at 55 billion and just over 29 billion euros, respectively, at the half-year mark.
For the MSCI World ETF (IE00B4L5Y983), Mohr also sees a clear buying overhang, as he has done so often in recent weeks and months. At Lang & Schwarz, on the other hand, Leo Puschmann reports relatively quiet trading and a balanced ratio between buying and selling.
IT stocks remain in demand
At the sector level, the focus is currently strongly on the technology and healthcare sectors. Puschmann sees "a lot of buying" for the iShares S&P 500 Information Technology (IT) ETF (IE00B3WJKG14) in particular.
At Société Générale, demand for the security is also relatively high. In addition, Mohr says there is more buying in the WisdomTree Artificial Intelligence ETF (IE00BDVPNG13), while he is seeing a bit more selling in iShares' MSCI World Health Care Sector ETF (IE00BJ5JNZ06). In the commodities and crypto segments, Poschmann says there are currently no standouts.
Money market ETFs as an overnight alternative
Trading in bond ETFs has also been less busy than usual in recent days. Société Générale reports a turnover share of this segment of only 20 percent, which otherwise makes up about one third.
If there is buying, it is mainly low-risk money market funds such as the Xtrackers II EUR Overnight Rate Swap ETF (LU0290358497) or the Lyxor Euro Overnight Return ETF (FR0010510800). Rediscovered after the comeback of interest rates a few months ago, these trackers are seeing "very high inflows" every week, Mohr reports.
Equity ETFs
Global | Buy |
Europe | Sell |
Germany | Sell |
US | Buy |
Sectora
Technology | Buy |
Health | Sell |
byThomas Koch, 1 August 2023, © Deutsche Börse AG