Monday, July 13, 2020

China’s Bull for the Week

Monday, July 13, 2020 – Although investors might have expected a pause in the stock market last week with continuing COVID-19 concerns, the bull market rages on. Stocks jumped at the start of trading this past Monday, with many accrediting the bump to a front-page editorial in the China Securities Journal, which stated that “fostering a healthy bull market after the pandemic is now more important to the economy than ever.” When a state-run publication appears to endorse a rally in equities, people listen and by Friday, the large-cap CSI 300 Index and Shanghai Composite Index rallied 7.5% and 7.3%, respectively.

In the US, all major indices ended the week on a positive note as well, with the Dow Jones Industrial Average advancing 1.44%, the S&P 500 rose 1.05% and Nasdaq gained 0.66%. Small-Caps outperformed with the Russell 2000 adding 1.70%. Looking at the sector break down, 9 of the 11 closed higher. Financials led the pack gaining 3.44% and Health Care lagged with -0.24%.

U.S. listed ETPs saw approximately $7 billion of inflow which seems like a relatively quiet week these days. The biggest winners on the top five list were Invesco QQQ Trust (QQQ), iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD), iShares Core U.S. Aggregate Bond ETF (AGG), SPDR Bloomberg Barclays High Yield Bond ETF (JNK) and iShares 20+ Year Treasury Bond ETF (TLT). Invesco QQQ Trust (QQQ) saw a $2.2 billion inflow while the remaining ETFs brought in approximately $1.2 billion, $815 million, $650 million and $620 million respectively. For outflows, the iShares Russell 2000 ETF (IWM) led shedding $1.9 billion in AUM and SPDR S&P 500 ETF Trust (SPY) saw around $1.5 billion in redemptions.

Looking ahead, the second quarter earnings season kicks off on Monday, with 8% of the S&P 500 constituents reporting earnings this week. In addition, important economic data being released includes Consumer Price Index (CPI) on Tuesday, retail sales on Thursday, and housing statistics begin on Friday.

ETFG Quant Movers - Those ETFs who have had the largest weekly change in their respective, overall ETFG Quant ratings.

ETFG Quant Winners: The top five gainers in their ETFG Quant Total Score were iPath S&P MLP ETN (IMLP), Innovator IBD ETF Leaders ETF (LDRS), Franklin FTSE Europe Hedged ETF (FLEH), Global X MSCI Super Dividend Emerging Markets ETF (SDEM), and AdvisorShares Vice ETF (ACT). Each ETP added approximately 10% to their overall ETFG Quant Total Score.

ETFG Quant Losers: Honorable mentions in the loser category were ELEMENTS SPECTRUM ETN (EEH), First Trust Preferred Securities and Income ETF (FPE), Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE), iShares MSCI Finland ETF (EFNL) and SPDR Solactive Germany ETF (ZDEU). Each ETF lost around 15% in Quant Total Score and the reasons for the drop can be traced to mostly behavioral factors.

ETFG Weekly Select List - The five most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model.

Considering the sector’s potential bounce back from this week’s lack luster performance, we’d like to highlight the top ETFs within the Health Care sector in this week’s Select List. SPDR S&P Biotech ETF (XBI) held on the 1st place while iShares Nasdaq Biotechnology ETF (IBB) moved from 5th to claim the 2nd spot this week. John Hancock Multifactor Healthcare ETF (JHMH) held on the 3rd place and  KraneShares Emerging Markets Healthcare Index ETF (KMED) Fidelity MSCI Health Care Index ETF (FHLC) the two newcomers to this week’s Select List claimed 4th and 5th respectively.

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