Strong rebound for European ETFs…
By Marlène Hassine Konqui, Head of ETF Research and Kristo Durbaku, ETF Research Analyst
Net new assets in the European ETF market rebounded to €4bn in November – well up from the €753m we saw in October.
Equities gathered the bulk of the inflows (€2.8bn), after another strong month for US equities (€1.4bn) and further signs of renewed interest in ESG ETFs (€491m) and China equities (€334m).
Fixed income ETF inflows doubled, led by developed market government bonds after they enjoyed their best month ever (€1.9bn).
Commodities, meanwhile, continued their descent.
China comes right into focus
China equity ETF recorded their 3rd best month ever with €334m of inflows in November.
This may be the latest sign of a more durable trend, which began in June as shown in Graph 2 below and is unmatched when looking at monthly flows on Chinese equities for the last three years.
So, what’s behind it?
In our view, the equity investing environment is much more favourable than it was.
First, Chinese equities may have bottomed out – given easier financial conditions in the US a potential easing of trade tensions and the likelihood of more accommodative measures from the central bank and the Chinese government.
Second, growth remains twice as fast as the US even if it is slowing right now – and that slowdown may only be down to more specific, possibly temporary factors anyway.
Third, valuations are cheap and this could sustain a recovery after the recent sell-off (MSCI China fell 11.5% in October).