Inflows into our cybersecurity ETP accelerate following the global ransomware attacks four weeks ago….
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Investors pile into short GBP ETPs following the shocking results of the UK general election while taking profit in gold ETPs as prices peaked above US$1,290/oz. last week.
Further price weakness triggered inflows into oil ETPs and outflows out of industrial metals ETPs.
Gold ETPs saw outflows on profit taking despite UK politics instability. Last week saw the price of gold peaking above US$1,290/oz. for two days as the US dollar came under pressure ahead of the testimony of former FBI chief Comey and following tensions in the Middle-East. Pressure on the gold price surprisingly faded away on Thursday despite the lack of details from president Draghi about how and when tapering will occur and despite elevated instability in UK politics following the results of the general election. Both would normally be price supportive for gold and therefore a source of gold-buying. Gold ETPs instead recorded further outflows on Friday with the total outflows for the week reaching US$59.6mn.
Investors pile in short GBP ETPs as uncertainty surrounding the Brexit negotiations resurface. The supposedly easy win turned into a shocking disappointment on Friday as UK prime minister lost her majority in parliament. The US$7.4mn inflows into short GBP ETPs indicate that investors are expecting further depreciation in the currency mainly against the US dollar in the near term. We however believe that a softer Brexit should be positive for the Sterling in the longer run.
Inflows remain strong and stable for cybersecurity and robotic ETPs. Last week saw US$36.5mn in cybersecurity ETP, the largest weekly inflows since inception. Since the massive ransomware cyber-attack that hit nearly 100 countries on the 12th of May, the ETP has recorded double digit inflows (in US$mn) every week, totalling US$81mn. Meanwhile, robotic ETP recorded US$8.9mn inflows last week.
Inflows in oil ETPs have little to do with the Qatar blockade. Last week saw nearly US$42mn of inflows in oil ETPs as the price of oil continues to slide. Long WTI crude ETPs received most of the flows (US$38.3mn) as prices near US$45/bbl. while US$12.6mn went into long Brent crude ETPs. The blockade of Qatar from four Arab nations including Saudi Arabia failed to support prices as the country is a very small producer of oil. US oil inventories, on the other hand, rose by 3.3mn barrels last week against market expectations, the first increase of stockpile since end of March 2017.
Industrial metal ETPs saw further outflows on China debt downgrade and a slowdown in China metal consumption. In addition to Moody’s downgrade of China’s sovereign debt three weeks ago, China domestic consumption of metals in the year to March 2017 declined for the first time since July 2016 according to the latest data from the World Bureau of Metal Statistics. The investment case for industrial metals remains however solid as the Chinese economy stabilises and as domestic balance remains in deficit.