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On a sectoral basis, agri commodities, energy and platinum, silver led precious metals witnessed better inflows compared to industrial metals that lagged behind.

23 Oct 2013

LONDON (Commodity Online): After a sustained dullness in commodity exchange trade funds (ETF) sector, Q3 2013 proved to be a turning point for the industry driven by a combination of price increases and the largest quarterly inflows into non-gold commodity ETFs since Q1, 2012, according to ETF Securities Ltd.

On a sectoral basis, agri commodities, energy and platinum, silver led precious metals witnessed better inflows compared to industrial metals that lagged behind.

Total assets in commodity ETFs rose by US $8.4 bn to US $135.9 bn. The rise in investors’ allocations to commodities reflects a general improvement in investor sentiment towards the asset class as the global industrial cycle has picked up, confidence in China’s growth prospects have improved and the prices of a number of key commodities have dropped to perceived attractive accumulation levels. Assuming the global manufacturing revival continues, and US and European political issues do not derail the general improvement in the global economic outlook, we believe that Q3 2013 potentially marks an important positive turning point for commodities.

A turning point
The third quarter of 2013 marked a turning point for commodity ETPs with net flows excluding gold rising by US$1.9bn, more than compensating for the outflows in Q2, and the largest quarterly inflows since Q1 2012. Improving global growth sentiment and investor demand for perceived undervalued laggard cyclical assets are likely
key factors driving increased investor interest in commodities. As long as global growth indicators continue to improve and the US Fed maintains a very gradual approach on its reductions in new liquidity provision, sentiment towards commodities as an asset class should continue to improve.

Key Performances
-Gold ETF outflows moderated to $4.2 bn compared to US $19.6 bn in Q 2, 2013
-Silver ETFs witnessed largest inflows in Q3- US$706 mn of net inflows
-Natural Gas saw the third largest inflows by US $284 mn while Oil ETF inflows were US $66 mn.
-Platinum ETF saw strong inflows at US $172 mn
-Industrial metal ETFs saw net outflow of US $195 mn
-Investors chose to play rebound in industrial cycle to put more funds in platinum, silver, OIl and broad based commodities.

-Agri commodity ETFs reversed the negative trend with net inflows of US $121 mn reversing the negative trend of Q2. Coffee dominated inflows in agri sector with $70 ,mn inflows followed by cocoa and wheat at $14 mn.

Sharp price declines across most agricultural commodities and highly negative speculative futures positioning appears to have attracted investors willing to wait for price normalization, ETFS report said.


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