Weekly Market Monitor – Week Ending 6 January 2023

• China-focussed ETFs (IZZ, ASIA, IAA) were the top performers last week as the Chinese stock market smiled upon a policy overhaul. Easing Covid restrictions, lifting the ban on Australian coal, and a relaxing grip on national tech giants were warmly received by investors.
• Carbon allowance ETFs (XCO2, GCO2) and crude oil (OOO) were the poorest performers last week. Record-high winter temperatures swept across Europe over New Year’s, with temperatures reaching a comfortable 20C in many countries. Such unexpectedly high temperatures significantly lowered energy demand, in turn driving down both crude oil prices and energy producer’s carbon credits demand.
• There were $207.4 million in reported inflows, with ASX tracking ETFs (A200, IOZ, QOZ) dominating the field. Investors seem to be feeling bullish on the commodity driven Australian economy as a recovering globe will heighten demand. The end of China’s ban on Australian coal also bodes positively for the Chinese-Australian trade relationship.
• There were $68.9 million in reported outflows, making it another week of positive flows for the industry.
• The top traded ETF list for the week featured ASX trackers (VAS, IOZ, STW) as usual, however it was short and leveraged funds (BBOZ, SNAS, BBUS, LNAS) that actually claimed majority in trading volumes for the week. Such high interest in trading tools such as these seem to indicate that investors expect significant volatility to come.

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