The analysts here at ETFdb.com analyzed the search patterns of visitors to our site during the week. Below, you’ll find our analysis of the top five trends. By analyzing these trends, we hope to unlock a better understanding of the investment themes trending on our site and in the market.
Our Argentina ETF List page was trending this week, with traffic increasing 325%. This most likely is due to the new president, Mauricio Macri, having been elected on Sunday, November 22. This ends the 12-year leftist regime, which will uplift the economy going forward. Elected president Macri promises to get the Argentinian economy moving again. He did not lay out a strategic plan or state how he intends to improve the economy yet. This is why the FTSE Argentina 20 ETF (ARGT ) opened high, at a price of $21, on Monday and slammed down as the day progressed, with a closing price of $19.15 – an 8.8% drop in one day. Investors realized the Argentinian elected president doesn’t yet have a plan of action, and the market took that as a negative sign.
Inflation dropped to the lowest levels since December 2013. The inflation reported in October stands at 14.3%. This still is high, but compared to a figure of 21.7% in 2014, it’s an improvement. GDP figures in 2014 did not look good for Argentina; from 2013 to 2014, GDP dropped from US$624 to $537 billion. This year, the economy began improving; Q2 GDP growth was about 2.1%. That’s the best growth since Q3 2013.
Going forward, GDP is expected to keep improving and inflation is expected to rise. Betting on Argentina still might be a risky move since the future of this economy is not tangible. However, given the shift from a leftist regime, we are optimistic this regime change might bring more investment into the Argentinian economy.
Russia is in the spotlight this week, and our visitors noticed. Traffic to our Russian ETF List page jumped 133% this week. The main contributor to this surge in traffic is the escalating situation in Syria, where Russia continues to launch rockets. Vladimir Putin ordered the escalation of bombings in Syria last week. After that order, Russia hit almost 500 targets in airstrikes. Furthermore, on Tuesday, November 24, a Russian warplane Su-24 flying in Syria briefly entered Turkish airspace. Turkey shot down this warplane after several warnings to Russia to stay out of Turkish airspace. This was the biggest confrontation between a NATO member country and Russia in 50 years.
Going forward, there’s a lot of uncertainty surrounding the future of the Russian economy. Given the major conflicts in which Russia is involved, investors should be cautious if they wish to invest in Russian ETFs. Only an investor with high ability and a willingness to take risk should get exposure to ETFs such as (RSX ) and (ERUS ). The upside potential is if certain U.S. sanctions are lifted earlier than anticipated, or if oil and gas prices begin to rise sharply – 70% of Russia’s exports are mineral-products related, such as crude and refined petroleum, and petroleum gas – the Russian economy will recover faster.
Aerospace & Defense
The Aerospace & Defense List page was trending this week, with a 99% increase in traffic. Over the past few weeks, this industry has been trending, given the overall geopolitical situation across the globe and the recent terrorist activity in Paris, Lebanon and Egypt. It also is important to note that investors are becoming more interested in the U.S. aerospace and defense industry, given the expected rise in the U.S. defense budget of 4.6% for 2016 and 2.8% in 2017.
There tends to be some cyclicality in this industry; for the past 20 years, the aerospace and defense industry has tended to have positive returns from mid-October to early January. The most actively traded ETFs in this industry, such as the iShares U.S. Aerospace & Defense ETF (ITA ) and the Powershares Aerospace & Defense ETF (PPA ), have increased more than 4% over the last month.
The Emerging Markets page was trending this week, with a 51% increase in traffic. Emerging Markets countries contribute about 58% of the overall world GDP, but there seems to be worries about different EM economies. The debt levels for EM countries rose from 73% of GDP in 2007 to 107% of GDP last year. This week, the European Central Bank raised some concerns regarding Emerging Markets and the Eurozone’s financial stability. The ECB mentioned in its semiannual Financial Stability Review that “occasional bouts of financial market volatility suggest that vulnerabilities stemming from emerging markets are increasing." This summer, we saw a sharp drop in the Chinese stock market as well as in other economies around the world.
The BRIC countries continue to be in the headlines this week, with Brazil really taking a hit after one of Latin America’s top independent investment-banking CEOs was arrested in a bribery probe. Rising tensions between Russia and Turkey over a downed Russian fighter jet continue to shake the Kremlin. Going into 2016, we are bearish in all BRIC countries except India, with last year’s election of Prime Minister Narendra Modi being a positive for the Indian economy. With the first single-party majority government in nearly three decades, it will make it easier for India to pass key reforms going forward. We continue to see more favorable reforms for foreign direct investment pushed by the prime minister.
Alternative Energy Equities
Our Alternative Energy Equities ETFs page had an increase in traffic of 43% for the week. Aside from the ethical and moral reasons for investing in this industry, we think there are other great reasons investors have become more interested in investing in this field in the last little while. Climate Council of Australia just released a report on renewable energy, and found it’s rapidly becoming the preferred choice for new electricity generation. The findings show that a lot has changed since the last major climate-talks meeting in Copenhagen six years ago. This was a meeting with 190 countries discussing action plans regarding the pressing matter of climate change. Investment in this space has grown 50%; solar photovoltaic (PV) modules’ price has dropped 75%; wind power has fallen 30%; 4.7 million new jobs were created worldwide; and the number of countries with renewable energy policy targets has nearly doubled since that meeting in 2009.
The next United Nations Framework Convention on Climate Change (UNFCCC) 21st Conference of the Parties (COP21) will be held in Paris from November 30 until December 11. The goals of the meeting are to continue to reduce carbon emissions, and to create policies and action plans to make sure the global temperature doesn’t rise more than 2°C above preindustrial levels.
A major contributor to climate change (aside from energy) is our current agricultural practice. However, utilizing renewable and alternative energies is a great step in the right direction for a brighter future. Although alternative energy ETFs such as (TAN ) and (PBW ) are down for the year, they’ve been on an uptrend for just over a week now. Going forward, given that our current levels of emissions (carbon dioxide, methane and nitrous oxide) are not sustainable and will deteriorate our planet, alternative energy will continue being a great industry for investors with long-term investment horizons. Not to mention that commodities such as oil and gas have underperformed for a year and a half, and investors may be looking for other energy plays.
The Bottom Line
This week, most of the trends resembled foreign markets – from a new president elected in Argentina and the ECB’s raised concerns regarding Emerging Markets, to Russia’s rising tensions in Syrian airstrikes and the taking down of one of its warplanes by Turkey. These types of tensions are the reasons why the Aerospace & Defense sector continues to trend.
Other trends include the interest of alternative energy investments in light of the new report from the Climate Council of Australia, and the UNFCCC meeting in Paris starting in less than a week.
Every week, by analyzing how you, our valued readers, search our property, we hope to uncover important trends that can help you understand how the market is behaving so you can fine-tune your investment strategy. At the end of each week, we’ll share these trends for the week, giving you better insights into the relevant market trends that will allow you to make more valuable decisions for your portfolio.