Tag Archives: etf

How Sustainable Is The Nikkei Rebound? Japan ETFs In Focus

Japan’s key index, the Nikkei, ended in the positive territory for the first time this year on Wednesday. The Nikkei gained 2.9%, or 496.67 points, on Wednesday, after losing nearly 1,800 points from the start of this year through Tuesday. Despite hitting the highest year-end close last year in 18 years, the benchmark was struggling to finish in the green from the start of this year following China-led global growth worries and the oil price slump. Reasons Behind the Rebound Better-than-expected trade data out of China, gains in the U.S. markets and decline in the yen’s value against major currencies emerged as the main reasons behind the rebound. The General Administration of Customs reported that Chinese exports declined 1.4% in December, narrower than a 6.8% drop in November and the markets’ estimate of an 8% decline. Though imports declined for the 14th consecutive month in December, the 7.6% drop in imports compared favorably with November’s plunge of 8.7% and the markets’ forecast of an 11.5% decline. Meanwhile, modest gains in the U.S. markets on Tuesday also boosted the Nikkei. A late rebound in Healthcare and Technology stocks helped the benchmarks to offset a further decline in oil prices. Also, the weaker yen helped the major exporters, including large-cap auto companies and tech companies, to attract investors, as it raised the possibility of an increase in export volumes. Will It Sustain? The sustainability of this rebound in the near term will largely depend on some key factors, including the condition of the Chinese economy, the movement of crude and the health of the Japanese economy. Though better-than-expected Chinese trade data boosted the markets on Wednesday, the decline in both exports and imports indicate that both global and domestic demand continued to remain weak. Meanwhile, the World Bank recently reduced its outlook for Chinese GDP growth in 2016 by 30 percentage points to 6.7%, below last year’s estimated growth rate of 6.9%. The bank also predicted that the economy may grow at a slower pace of 6.5% over the next two years. Separately, given the weak outlook for the Chinese economy, which is one of the leading importers of oil, and an already oversupplied market, there is little hope of a recovery in oil prices. Crude is currently trading at a 12-year low, with every indication of a slide below $30 per barrel. In this scenario, the Japanese economic environment will play a key role in setting the course of the Nikkei in the coming months. Japan opted for several economic stimulus measures last year, which proved to be more effective than the steps taken by China and the eurozone. The economy rebounded strongly in the third quarter to register a GDP growth rate of 1%, as against the second quarter’s contraction of 0.5%. Meanwhile, the impact of recent modifications in the quantitative easing program by the Bank of Japan (BOJ) will also remain in focus. The bank opted for raising the Japanese government bonds’ (JGBs) average maturity from 7-10 years to 7-12 years, and announced that it will allocate 300 billion yen of assets annually in purchasing ETFs that seek to follow the JPX-Nikkei Index 400. Japan ETFs in Focus In this scenario, popular Japan ETFs and funds that closely track the performance of the Nikkei will remain on investors’ radar in the coming months. The Precidian MAXIS Nikkei 225 Index ETF (NYSEARCA: NKY ), which tracks the performance of the Nikkei 225 Index, returned nearly 9.4% last year. Meanwhile, the performance of other popular Japan ETFs will also remain in focus in the near term. In 2015, the iShares MSCI Japan ETF (NYSEARCA: EWJ ), the WisdomTree Japan Hedged Equity ETF (NYSEARCA: DXJ ) and the Deutsche X-trackers MSCI Japan Hedged Equity ETF (NYSEARCA: DBJP ) returned 8.9%, 3.3% and 4.5%, respectively. Original Post

RBS: Sell All Of It, Everything Except High-Quality Bonds

Original post By Stuart Burns We like to think of ourselves as optimists at MetalMiner. If given the option, we prefer the glass half full than the glass half empty, so an article in the London Telegraph and many other newspapers this week reporting RBS Bank’s latest client note makes depressing reading, but unfortunately worthy of discussion. The note advises clients to “Sell everything except high-quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,” RBS has advised clients to brace for a “cataclysmic year” and a global deflationary crisis, warning that major stock markets could fall by a fifth and oil may plummet to $16 a barrel. It All Must Go! Nor is RBS playing a new tune; since November, it has been warning the oil price and stock markets are headed lower, sure enough the oil price has continued to fall, dropping to a 12-year low of $30.41 for Brent and $30.43 for West Texas Intermediate this week. Click to enlarge Source: Telegraph Newspaper The markets are clearly spooked and by a number of factors. China’s stock market is being kept alive only on the oxygen of government support via state enterprises buying shares. Oil consumption has stalled due to slow growth and warm weather, and oil supply continues to grow as Iran gears up to enter the market. This year, the biggest factor seems to be the fear of a devaluation of the Chinese yuan, a move Beijing is seeking to reassure the markets is not on the cards. But, guess what? No one believes them. Fears over China, therefore, are multiplying and RBS says, “China has set off a major correction and it is going to snowball. Equities and credit have become very dangerous, “and the bank’s Andrew Roberts, research chief for European economics and rates, expects Wall Street and European stocks to fall by 10% to 20% this year. Larry Summers, the former US Treasury Secretary, in more measured terms, agrees saying it would be a mistake to dismiss the current financial squall as froth. What Does This Mean for Metals? Metals prices have taken their cue from energy and have been weak since the start of the month, but if RBS is right, they could see support in the months ahead. Prices have, in part, been weak due to a stronger dollar, but RBS suggests the Federal Reserve won’t raise rates again at the March meeting and by the summer may be looking at a rate reduction. Either way, if rates don’t rise as the market had been expecting and had priced into the dollar, we could see dollar weakness in 2016 removing one of the factors depressing metal prices. It’s true, global growth is muted, global trade is down and loans are contracting, all in an environment of record debt, not a great backdrop for companies to invest and create growth. Yet, there are some bright spots. Growth in Europe is looking more positive as austerity has largely come to an end. Money supply in Germany is up 10% and growth in the US has remained solid if unspectacular. What to Do? Would you follow RBS’s advice if you were its client? Would you get out of everything? Bank of America runs a Bull & Bear Index that tracks global equity prices and is supposed to give warning of contrarian buy signals. We have all heard of the saying “the night is darkest just before the dawn.” Well, BOA’s index is supposed to peak over the horizon and see if dawn is approaching. Click to enlarge Source: Bank of America As you can see, 88% of global indexes are now trading below their 200-day and 50-day moving averages. The index is therefore at an ultra-negative level of 1.3, but BOA is not suggesting we take our cue and rush out to buy shares. Even though the index has a good track record, the bank says we need certain “catalysts” to be in place, not least a stabilization of the Chinese yuan and oil prices, better Purchasing Managers’ Index data and a halt to the rising dollar before it would say, with any confidence, RBS has got it wrong and the BOA index has it right. As so often before, then, it is down to China. We watch and wait, and hope events unfold more positively in the weeks and months ahead than they have started to so far this year.

Netflix U.S. subscriber growth a concern for Q4

While Netflix (NFLX) has green-field opportunities overseas, its domestic growth prospects might be hitting a wall. ITG Investment Research analyst Steve Weinstein on Thursday lowered his estimates for Netflix’s Q4 domestic streaming subscribers and revenue. He believes Netflix will add 1.13 million net domestic paid streaming subscribers in the fourth quarter, down from his previous estimate of 1.15 million new subscribers. His estimate is below