The dollar impact is likely to be negative for Gold and silver, but positive for aluminum, copper, zinc, Lead and nickel, Morgan Stanley reports. Meanwhile, the energy and livestock sub-indices are estimated to see outflows of near $660 million and $230 million, respectively, based on MS estimates.
West Texas Intermediate crude should see the largest nominal impact, with nearly $7.5 billion of exposure (5.7% of total open interest) needing to be liquidated (from the March contract) to satisfy new weights for both S&P GSCI and DJUBS, said MS.
The DJUBS will also introduce Brent crude to its index, meaning buying approximately $3.6 billion (in the May contract). In aggregate Brent should see total inflows of an estimated $4.5 billion. Natural Gas will see marked inflows of approximately $3.2 billion.
“Other commodities expected to have notable re-weightings include copper, zinc, nickel, wheat, soybean oil, Sugar and cotton,” MS concluded.
