ETF Express: Week Ending 10 November 2023

ETF Express is Global X’s weekly coverage of the latest ETF Market Moves, Thematic Spotlight and Commodity Calls.

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• Crypto ETFs (EBTC, EETH) rallied on yet another wave of speculation surrounding possible spot ETF listings in the US. This time BlackRock appears to have filed for the listing of a spot Ethereum ETF.¹ Investor sentiments are high as BlackRock’s multiple submissions are being interpreted as a return of institutions to the cryptocurrency scene.
• Physical platinum (ETPMPT) was the poorest performer last week as its sister metal, palladium, briefly fell below US$1000 per pound for the first time in five years.² Both platinum and palladium are mainly used in the construction of catalytic converters in traditional petrol vehicles, the rise of EVs have seen this demand weaken.
• There were $328 million in reported inflows for the week, and only $159.7 million in outflows, marking a week of net inflows for the Australian ETF industry.

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Cybersecurity in Focus as Global Enterprises Get Hacked

Cybersecurity and International Equities

The world’s largest bank and a port operator were both hit by cyberattacks last week, sending shockwaves across the markets and raising the alarm on the importance of cybersecurity.

Industrial and Commercial Bank of China (ICBC) suffered a ransomware attack on its US branch which has since been attributed to Lockbit, a Russian group also linked to the hacking of Boeing Co, and UK’s Royal Mail.³ Settling systems were sabotaged by the perpetrators, meaning the branch was unable to clear US treasury trades. Traders at the bank were forced to carry physical USB drives to send settlement details to their clients, and markets were immediately disrupted as fellow banks were forced to reroute trades.⁴

DP World, a port operator responsible for over 40% of goods flowing in and out of Australia, was also hit last week.⁵ While the company has not discovered who was behind the cyberattack, the effects of the hack are already apparent. Four of Australia’s largest ports will likely experience interruptions as DP World’s IT systems remain disconnected from the internet.⁶ These disruptions are exacerbated by an ongoing strike by the Maritime Union of Australia over improvements in wages and work conditions.⁷ DP World is not alone in its cyber-crisis, with Japan’s biggest maritime port being hit by Lockbit in July .⁸

These largescale cyberattacks are indicative of the growing importance of cybersecurity as systems become increasingly digitised, no matter the industry. Global cybercrime costs totalled around US$7.1 trillion in 2022 and is forecasted to approach US$8.15 trillion in 2023.⁹ Further out, analysts expect cyberattack costs to grow to almost US$15 trillion within the decade.¹⁰

Explore cybersecurity with BUGG.

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Lithium

Bullish

• SQM and Codelco are close to reaching a preliminary agreement for the Chilean state copper company to enter SQM operations.¹¹ This would remove the risk of SQM losing its assets once the current contract expires as they now fulfil Chile’s new government policy requiring state involvement in all new lithium projects.

Bearish

• Oil giant, Exxon Mobil, has begun drilling for lithium in Arkansas, US, as part of its plans to become a producer of lithium for electric vehicles.¹² The company intends to be the leading supplier of EVs by 2030.

Explore lithium with ACDC.

Crude Oil

Bullish

• The OPEC have reiterated that global supply of crude oil remains tight. The oil producing nations say China’s crude oil imports are healthy and Asian refining margins are strong.¹³
• The OPEC also maintained forecasts that global oil demand will increase by 2.25 million barrels per day in 2023.¹⁴

Bearish

• Iraqi oil minister Hayan Abdel-Ghani is in talks with the Kurdistan Regional Government to restart an oil pipeline which could supply up to 500,000 barrels of crude oil per day.¹⁵

Explore crude oil with BCOM.

Copper

Bullish

• Healthy credit data from China is driving copper prices. Chinese total social financing, a broad measure of credit and liquidity in the economy, came in at CN$1.85 trillion last month, and credit growth climbed 0.3% month-over-month thanks to a surge in government bond sales.¹⁶
• China has rapidly expanded its copper refining industry. China’s refined copper output is nearing all-time highs this year despite there being three more calendar months to go.¹⁷

Bearish

• Chinese CPI data released last week showed consumer prices fell yet again, a sign that the economy is struggling to return to form and consumer spending is low. Chinese CPI has now fallen for 13 consecutive months.

Explore copper with WIRE.

^{Forecasts are not guaranteed, and undue reliance should not be placed on them. This information is based on views held by Global X or referenced sources as at 14th November 2023.}