Which Traded Fund - 2800.HK vs 2828.HK? might 2828 be the better ETF for your clients? also an update on our OIL & GAS ETFs

[YeT...@ocbcsec.com]

 

Good day TRs,
In today's issue we take a quick look at how the Oil and Gas ETFs from our first write-up are doing and highlight a lesser known ETF that might better for your clients who are buying the Hong Kong Tracker Fund - 2800.HK

OIL & GAS: An update
From the time we had highlighted it in our first WTF write up last month many of the Energy and Oil & Gas ETFs have risen together with the rising prices of oil.
XLE:        +10.49%
IXC:        +11.29%
USO:        +19.50%
USL:        +16.52
Month-to-date Oil and Energy ETFs were amongst the top traded US securities in OSPL, with UWTI, USO, UCO and SCO all in the top 10 and DWTI in the top 20.
With the EIA reporting a less than an expected increase in the number of weekly inventories of barrels of oil and the IEA reporting that it sees 'Notable Acceleration' in Oil Demand (See Samuel's mail 15/04/15 16:12pm) prices of crude have been rising.

TR's with clients interested in short term/day trading of crude oil prices can look at the following counters:
UWTI:        3x daily long crude oil
DWTI:        3x daily short crude oil
UCO:        2x daily long crude oil
SCO:        2x daily inverse crude oil


CHINA & HONG KONG: Who is 2828.HK?
In the past month many HK and China ETFs have seen a huge surge in volumes, notably Hong Kong Tracker Fund (2800 HK) and iShares China A50 (2823 HK)which many of you are familiar with.
However the lesser known ETF you might not have heard about, that is rapidly growing in size and volume is 2828 HK - the Hang Seng H-Shares Index ETF. YTD 2828 has seen inflows of US$2.9 billion and volumes have grow from an an average of 5-6 million per day to over 30 million in the past week. What exactly is the 2828 and the H-Shares index that it tracks? And how is it different from the 2800 HSI tracker fund?

The H-Shares index is a more concentrated index that consists of only 40 H-share stocks as opposed to the 50 constituents of the HSI. For clients who wish to invest in H-shares due to the difference in pricing with their A-Shares counterpart, 2828 maybe a better option than 2800 as it doesn't not hold shares which are not listed in the Mainland.  Below is a quick guide on the top 10 holdings of each ETF.

               

Other than more concentrated exposure to the H shares, 2828 gives its holder more exposure to the Finance industry than 2800 (Banking 41.16% vs 30.83%, Insurance 23.19% vs 12.92%) as well as the Oil and Gas industry (11.33% vs 6.66%). For clients looking to play on the price differential between H and A shares (who might also be bullish on energy) 2828 maybe the better ETF for them.
                       2800                        2828        
YTD Performance:        +17.36%       vs        +20.03%
3M Performance:        +14.02%       vs         +18.47%
1M Performance:        +16.15%       vs        +23.18%

More questions? Have a strategy your client wants to execute using an ETF? Please feel free to call the Products desk @ 6318 2376

As always please note:

• Leveraged and inverse products are extremely volatile, clients should be fully aware and understand the effects of leverage and a daily reset.
• Many leveraged and inverse ETFs are reset DAILY. Due to the daily re-balancing the long term performance of the products may deviate significantly from the long term performance of the underlying.
• USO, USL are all futures based ETFs and as such do not track the spot price of oil that you often see or hear about in the news. Clients who trade in such ETFs should be familiar with futures and the concepts of contango and backwardation and their impact on these ETFs.
• All ETFs highlighted in this mail are overseas listed ETFs and as such are considered SIP products. (Clients will need to pass CAR & sign RWS)

 

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