Back to the complete issue
Tuesday, 8 June 2021

Record inflows into ETFs could be backstopping global stocks

ETFs see record inflows in 2021: Inflows into exchange-traded funds have accelerated at a record pace so far this year thanks to retail investors pouring into the market, the Financial Times reports. ETF inflows have reached USD 305 bn in 2021, far above the USD 249 bn invested through the whole of 2020, according to research firm CFRA.

Are retail investors (paradoxically?) smoothing out market volatility? A 5% decline in US stocks normally happens c. three times each year, but no pullbacks have occurred in the past seven months, a lack of volatility analysts attribute to retail investors, who don’t seem to be deterred by sell-offs and move to buy the dip. “Whenever there is an immediate drawdown in equities, retail comes in immediately to buy the dip,” says one analyst. “People default to ETFs as a way to buy the dip. And recently retail has been buying more ETFs than any other segment of the equity population.”

The world is expected to remain in the grip of the global chip shortage until at least mid-2022, with high demand for vehicles and consumer electronics expected to continue into next year, a leading electronics manufacturer has said, according to the Financial Times. “Some are expecting [shortages to continue] into 2023,” said a procurement and supply chain officer at Flex, the world’s third largest electronics contract manufacturer. This has forced car and consumer electronics companies to adopt new approaches to secure their supply, such as paying for semiconductors in advance and purchasing chip plants.

What we’re hoping for: The forecast could get brighter if covid-19 vaccinations lead consumers to spend more on services and less on electronics, the salmon-colored paper says.

BP expects oil demand to go from strength to strength: A strong recovery in global crude demand is imminent and will last for a long time, CEO Bernard Looney told Bloomberg. His comments come as Brent crude rose above USD 70 a barrel last week for the first time in more than two years. A report from Standard Chartered suggests that this month and July will see oil demand recovery “at the point of maximum velocity.”

But OPEC+ countries are taking a cautious approach, with the Saudi Energy Minister saying he will believe the heightened demand predictions when he sees them playing out on the ground. The coalition of oil producing countries agreed last week to add over 800 bbl/d to supply in July, as part of a gradual easing of cuts made last year to protect oil prices from a supply glut during covid-19.

Crypto scams are on the rise due to the absence of industry regulations and the anonymity of digital tokens, the Wall Street Journal reports. Consumers lost some USD 82 mn to fraudsters during 4Q2020 and 1Q2021, a ten-fold increase from the same period a year earlier, according to the Federal Trade Commission. The commission’s figures are based on self reporting and focused only in the US, so the actual figure of money lost to crypto scams is likely to be much higher worldwide.

Down

EGX30

10,105

-0.2% (YTD: -6.8%)

None

USD (CBE)

Buy 15.64

Sell 15.74

None

USD at CIB

Buy 15.64

Sell 15.74

None

Interest rates CBE

8.25% deposit

9.25% lending

Up

Tadawul

10,719

+0.3% (YTD: +23.4%)

Up

ADX

6,646

+0.3% (YTD: +31.8%)

Up

DFM

2,839

+0.7% (YTD: +13.9%)

Down

S&P 500

4,226

-0.1% (YTD: +12.5%)

Up

FTSE 100

7,077

+0.1% (YTD: +9.6%)

Down

Brent crude

USD 71.49

-0.6%

Up

Natural gas (Nymex)

USD 3.10

+1.0%

Up

Gold

USD 1,901.60

+0.2%

Down

BTC

USD 34,188

-3.9% (as of midnight)

The EGX30 fell 0.2% at today’s close on turnover of EGP 1.71 bn (24.2% above the 90-day average). Foreign investors were net sellers. The index is down 6.8% YTD.

In the green: Oriental Weavers (+6.2%), TMG Holding (+5.2%) and Telecom Egypt (+4.0%).

In the red: Fawry (-3.3%), CIB (-1.8%) and GB Auto (-1.8%).

It’s a mixed picture in global markets so far this morning, with the Kospi alone among major Asian indexes to be in the green. Futures suggest a mixed open in Europe later this morning — and see the Dow in the red, Nasdaq and S&P in the green at the opening bell on Wall Street.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2021 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of Commercial International Bank (tax ID: 204-891-949), the largest private-sector bank in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; and Act Financial (tax ID: 493-924-612), the leading activist investor in Egypt; and Abu Auf (tax ID: 584-628-846), the leading health foodmaker in Egypt and the region.