US equity trackers remain the favourites of ETF investors. Technology and energy ETFs are bought in a predominantly positive environment.

25 October 2022. FRANKFURT (Börse Frankfurt). Investors are not yet following the recent upswing on the stock markets. "The interest rate expectations are still there and the economic worry lines have not become smaller either," explain Ralf Umlauf and Ulrich Wortberg from Helaba. However, market participants would possibly bet on a slowdown of the interest rate cycle towards the end of the year and 2023, not only in Europe but also in the USA.

Gas prices and their impact on inflation are the source of hope: according to Martin Hartmann of Commerzbank, the lowest level of gas prices since mid-June, which is mainly attributed to the mild autumn weather, gives hope that consumer price increases will soon reach their peak.

Buying on the one hand, profit-taking on the other

Frank Mohr from Société Générale adds that the reporting season is better than expected. "But investors are not yet following the clear market direction. They are wavering between confidence and scepticism." Accordingly, ETF purchases were also offset by profit-taking. "Overall, we see a clear buying overhang this week."

"Despite the recovery, turnover is still subdued," summarises Jan Duisberg of ICF Bank. "Equity ETFs are the most likely to be bought."

Andreas Schröer of Lang & Schwarz reports restraint at certain price marks: "We see profits being taken towards 13,000 points in the DAX and also in the Nasdaq indices at current levels."

Duisberg

US indices and global ETFs remain trading and investment favourites

According to Schröer, speculation will continue. Thus, leveraged investments are made in both directions in US technology stocks in the NASDAQ 100. Accordingly, the WisdomTree NASDAQ 100 3x Daily Leveraged (IE00BLRPRL42) and the opposing short product (IE00BLRPRJ20) are among Lang & Schwarz's top sellers. The latter is also among the highest-turnover stocks at ICF Bank. In addition, according to Lang & Schwarz, a lot of business is done with the iShares Nasdaq 100 ETF (DE000A0F5UF5).

In Société Générale's day-to-day business, US equity ETFs and global equity trackers stand out as favourites. The Vanguard S&P 500 (IE00B3XXRP09) was among the best-selling US equity trackers. A relatively new addition to the list of particularly popular products is the sustainable version of the classic index from UBS, the UBS S&P 500 ESG (IE00BHXMHK04).

But globally diversified ETFs are also in demand. Among the most bought stocks is the iShares Core MSCI World (IE00B4L5Y983), one of the classics.

On the other hand, other regions were mostly sold. In German equity ETFs, Mohr reports profit-taking in the iShares Core DAX (DE0005933931), while at ICF Bank a double-leveraged DAX short ETF (<DE000A0X9AA8>) is very popular.

Asia: Not only sales

Asian index funds are also in focus in trading at Lang & Schwarz. With concerns of even more ideological policies from China's leader Xi Jinping and weak economic data, Chinese equities in particular are falling. "On Friday evening, we also saw mostly declines, but since the beginning of the week, Chinese equity trackers have been bought again," reports Schröer. "Here we have clearly more demand this week." Schröer cites purchases of the Lyxor FTSE China A50 (LU0947415054) as an example. In addition to China, Taiwan was also more heavily traded, for example the Xtrackers MSCI Taiwan (LU0292109187).

Sectors: technology and energy stocks in demand

The technology sector, where buying dominates, is the most traded of the sectors at Société Générale this week. "People are buying here," reports Mohr. Mohr notes particularly high demand for the First Trust Nasdaq Cybersecurity (IE00BF16M727) and the Invesco US Technology Sector (<IE00B3VSSL01>). The ETF is up more than 4 per cent for the week.

According to Mohr, buying also predominates in energy stocks, which, as in the previous week, are the number two sector ETF traded by Société Générale. Here, as in the previous week, investors were mainly buying the SPDR S&P US Energy Select Sector (IE00BWBXM492). The sector ETF has gained almost 6 per cent over the week.

Schröer also reports more turnover in energy stocks. Interest in the WisdomTree Natural Gas 3x Daily Leveraged (IE00BLRPRG98) and the corresponding short ETF (IE00B76BRD76) is strong.

Mohr

Profit-taking, on the other hand, determines trading at Mohr with the classic Global Clean Energy

(<IE000U58J0M1>) from iShares. On a weekly basis, this ETF lost around 1.7 per cent, and 12.7 per cent on a

monthly basis.

Mohr adds that basic materials are in third place in terms of turnover among the sectors of Société Générale, but here the sales have the upper hand. The iShares STOXX Europe 600 Basic Resources (DE000A0F5UK5) was sold.

Precious metals: More demand

Despite the subdued development of precious metals, gold and silver ETCs are currently in demand. As Duisberg reports, demand for securitisation has increased for both gold (<DE000A0N62G0>) and silver (<DE000A0N62F2>).

Furthermore, Duisberg registers more turnover in Ripple, while crypto ETP trading is otherwise quiet: For Ripple (CH0454664043), purchases and sales had balanced each other out at first, but in the meantime the sell side predominated.

Fixed Income: Easing of Yields

Yields are falling on the bond market, especially in the UK with the change of prime minister.

Mohr reports normal trading volumes. "As in the past week, government bonds dominate bond ETF trading." Purchases and sales are fairly balanced, for example of eurozone government bonds (LU0290355717) , (FR0010754184), he said. Sales were in short-dated European government bonds, such as in Amundi Govies 0-6 Months EuroMTS Investment Grade (FR0010754200), and European corporate debt in iShares Core Euro Corp Bond (IE00B3F81R35).

from: Antje Erhard 25 October 2022, © Deutsche Börse AG