Weekly European ETF Trading Report

August 10, 2009


European ETF trading commentary for the week ending 7 August 2009, provided by LaBranche Structured Products Europe (LSPE).

Over the past three weeks we had net inflows of around €300 million (lower than in previous weeks when corporate bond ETFs were well subscribed) and an 11:3 ratio in favour of creations over redemptions.

We saw decent investment in the db x-trackers FTSE All Share (XETRA: XASX), the Lyxor ETF FTSE All Share (LSE: LFAS), the iShares FTSE 250 ETF (LSE: MIDD) and the iShares MSCI Europe ex UK ETF (LSE: IEUX). Property ETFs such as the iShares FTSE EPRA/NAREIT UK property fund (LSE: IUKP), the EasyETF EPRA Europe (NYSE Euronext: EEP), the iShares FTSE EPRA European property fund (LSE: IPRP) and the iShares FTSE EPRA/NAREIT developed markets property yield fund (LSE: IDWP) also did well and accounted for the largest share of creations last week.

In emerging markets, there were sellers in the Lyxor ETF MSCI India ETF (NYSE Euronext: INR) and buyers in the iShares MSCI Far East Asia ex Japan (LSE: IFFF). There was also investment in Brazilian ETFs, notably the Lyxor ETF Brazil (NYSE Euronext: RIO) and the iShares MSCI Brazil ETF (LSE: IBZL), following buy recommendations on the Bovespa index in reports by investment banks.

Corporate bonds were a lot quieter given a wider spread and thin liquidity in the underlying markets. However, there was two-way activity in the iShares sterling corporate bond ETF (LSE: SLXX) and we saw steady creations in euro-denominated funds, though more in the iShares Barclays euro corporate bond ETF (LSE: IEAC) than in the iShares euro corporate bond ETF (LSE: IBCX).

Many investors took profits in ETFs tracking equity sectors, including those based on the DJ Stoxx 600 automobiles and parts (SXAP), banks (SX7P) and telecoms (SXKP) indices. However, investors appear to be holding on to ETFs tracking the basic resources (SXPP) and food and beverage (SX3P) indices for the moment.

There was also activity in exchange-traded commodities. Zinc and copper were up 14% and 15%, respectively, in the last 10 days. These raw materials prices have touched ten-month highs thanks to the possibility of a stronger US recovery in the second half and loosening bank credit conditions. China is the world's largest copper consumer, followed by the US; ETFs tracking Chinese equities include the Lyxor ETF China Enterprise (NYSE Euronext: ASI), the db x-trackers FTSE Xinhua 25 (XETRA: XX25) and the iShares FTSE Xinhua 25 ETF (LSE: FXC). The ETFS physical palladium ETC (LSE: PHPD) rose to record levels.

Happy trading (or holidays)!

This report is not an offer to sell or a solicitation of any investment products or other financial product or service, an official confirmation of any transaction, or an official statement of LSPE.

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