Weekly European ETF Trading Report

December 14, 2009

European ETF trading commentary for the week ending 11 December, provided by LaBranche Structured Products Europe (LSPE).

Although the equity market lost around 1% last week, investor appetite for ETFs was strong and LSPE saw big OTC block trades on a daily basis. In the primary market our creation/redemption ratio was 6:1 in favour of creations (due to very large emerging markets creations), while in the secondary market buyers outweighed sellers by 2:1.

Investor focus was on emerging markets and LSPE sold in excess of €350 million of the db x-trackers Emerging Markets ETF (LSE: XMEM), Lyxor ETF MSCI Emerging Markets (NYSE Euronext: LEM), iShares MSCI Emerging Markets ETF (LSE: IEEM), Lyxor ETF China Enterprise HSC (NYSE Euronext: ASI) and iShares FTSE/XINHUA China 25 ETF (LSE: FXC) to institutional clients. We also had very good two-way flows in the Lyxor ETF MSCI EM Latin America (NYSE Euronext: LTM) and iShares MSCI World ETF (LSE: IWRD).

In commodities, investors sold trackers of gold, which lost 5% over the course of last week, in significant quantities almost every day, while LSPE witnessed some large OTC block buyers of the ETFS Corn ETC (LSE: CORN).

By sector, telecoms was still in demand but lost 1.5% last week, while we saw big sales of ETFs tracking the DJ Stoxx Construction and Materials index (SXOP).

We saw buyers of bond ETFs return last Wednesday after a couple of weeks of selling, with renewed interest in corporate and aggregate bond funds such as the iShares Barclays Euro Corporate Bond ETF (LSE: IEAC) and the iShares Barclays Euro Aggregate Bond fund (LSE: IEAG). We also witnessed good two-way flows in the iShares Euro Corporate Bond ETF (LSE: IBCX) and particularly strong demand for both the iShares $ TIPS (LSE: ITPS) and its US-listed counterpart, the iShares Barclays TIPS Bond Fund (NYSE: TIP).

Finally, we saw big inflows in the iShares MSCI North America ETF (LSE: INAA) throughout the week with creations on a daily basis. Please note that the Johannesburg Stock Exchange will be closed this Wednesday (16 December), which will affect the Lyxor ETF South Africa FTSE JS ETF (NYSE Euronext: AFS).

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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