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ETF Securities reports robotic ETPs have highest inflows since March

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The weekly report from ETF Securities finds that last week industrial metal ETPs saw their first inflows in four weeks.

The firm writes that as industrial metal positioning started to look stretched in August, they saw outflows begin and that continued as prices fell.

“However, last week as prices of most metals started to show signs of reaching a trough, inflows resumed. Speculative positioning in the futures market have pared back and volumes of trading in Shanghai have fallen indicating momentum trades are being shaken out. We saw USD5.0 million into long copper and USD4.4 million into long nickel ETPs. Nickel is likely to benefit from growing demand for battery technology. Last week China announced that 10 per cent of vehicles that automakers produce in 2019 must be low or zero emission, rising to 12 per cent in 2020.

“With a higher loading of nickel expected in future batteries, the metal stands to benefit from regulatory driven changes in demand.”

ETF Securities reports that robotic ETPs saw highest inflows since March 2017, with USD29.1 million flowing in as investors are impressed with a 35 per cent return over the past year. Although technology stocks pared back gains in September, robotic stocks bucked the trend, posting over 4 per cent gain.

Crude oil ETP outflows reached a seven-week high with oil prices receiving a boost earlier in the week as the autonomous Kurdish region in Iraq went to vote for independence. Investors took profits, withdrawing USD53.1 million from long crude oil ETPs.

“There is a risk that this oil-rich region, which produces more than half a million barrels per day (mb/d) of Iraq’s four and a half (mb/d) output could be shut off from international markets as the Iraqi government bans the sale of oil from the region. This threat was largely ignored until the Turkish government claimed it will shut off the pipeline that carries the crude. Brent reached a two-year high on Monday, rising almost 4 per cent on the day. However, the likelihood of Turkey following through is slim, given that it depends heavily on this source of oil and it is difficult to find alternatives at such short notice.

“Indeed, the position of the Kurdistan Regional Government (KRG) is that they want the vote to open dialogue with the Iraqi government about independence rather than a declaration of independence itself. Despite the heated rhetoric and military drills, it is very likely that production will remain uninterrupted.”

USD13.4 million of gold ETP outflows followed two weeks of inflows. The firm writes: “It looks like investors’ mind-sets are back on monetary policy after sabre-rattling between US and North Korea temporarily shifted their attention towards geopolitics. US Federal Reserve Chair Yellen emphasised in her speech last week that there are risks in moving too slowly in tightening. US 10-yr Treasures rose to 2.31 per cent from 2.25 per cent a week earlier, while the US dollar index gained 0.8 per cent. Gold fell from USD1310/oz on Tuesday to USD1287.91/oz on Friday. Investors sold as gold prices fell.”

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