😎 Summer Sale Exclusive - Up to 50% off AI-powered stock picks by InvestingProCLAIM SALE

Most Metal ETPs Are Getting Killed Right Now. One Has Jumped 84%

Published 20-07-2018, 06:05 pm
© Reuters.  Most Metal ETPs Are Getting Killed Right Now. One Has Jumped 84%
USD/CNY
-
HG
-
0P6E
-
COPX
-
DBB
-
MAL
-
MLDc1
-
MNKc1
-
MZIc1
-
SG41
-

(Bloomberg) -- The mayhem in industrial metals is creating waves across $1.4 billion of exchange-traded products tracking the sector.

Their prices are whipsawing, investors are bailing, and some may be profiting spectacularly from the sector’s collapse.

While base metals secured a reprieve Friday, they’ve been rattled by a sell-off over fears for Chinese demand and the Sino-U.S. trade war, after copper breached the $6,000 mark this week.

Here’s how the tumult is rattling through the passive-product industry.

Miners Mauled

Firms that extract copper have sold off, putting pressure on the $71 million Global X Copper Miners ETF, ticker COPX. The fund hasn’t seen much flow in either direction, but its price has dropped to the lowest in more than a year.

Vancouver-based First Quantum Minerals Ltd (TO:FM) , one of the ETF’s top holding, dropped as much as 8.2 percent on Thursday. Diversification may have helped the ETF, as it fell as much as 3.4 percent.

Exit Music

Investors pulled $43 million over the past five days from the largest industrial metals ETF -- the Invesco DB Base Metals Fund, ticker DBB -- the most since 2014. The ETF holds futures contracts on metals such as aluminum, copper and zinc.

While copper has captured most of the headlines, zinc, lead, nickel and aluminum have also taken a dive as the yuan tumbles against the dollar, putting further pressure on buyers in China, the world’s leading consumer of industrial commodities.

Go Shortie

It isn’t all carnage out there. One copper product is up 84 percent over the past month as of Thursday’s close. The London-listed SG Copper x5 Daily Short ETN, ticker SG41, provides daily exposure to the price of copper futures at an expense ratio of 1.95 percent. The so-called inverse product is designed to gain when copper falls.

It’s one of many thinly-traded notes listed in Europe that provide outsize exposure to movements across asset classes -- offering battle-ready investors an opportunity to pounce on the next commodity downturn.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.