China and Crypto ETFs looking attractive again

‘China Digitalization’ dethroned ‘Global Infrastructure’ to become the theme of choice for investors last week, netting USD$399 million over the news of a waning lockdown in Shanghai and a Chinese economic plan to revive the economy. Meanwhile, ‘Cryptocurrency’, the second most appealing theme, pulled in USD$316 million of capital as investor sentiment improves. 

Investors diving into China ETFs

Chinese technology stocks rose last week over the news of a waning Shanghai lockdown and corresponding economic plans. Chinese authorities announced the easing of restrictions and the end of a two-month lockdown that was instilled in Shanghai as part of the zero-Covid policy. Moreover, officials declared a fully-fledged package to revitalize its pandemic-hit economy. The economic package includes 33 different measures across fiscal, financial, investment and industrial policies. Global investors stormed the ‘China Digitalization’ theme, pushing to lead the flow receivers in the thematic universe. It brought in USD$399 million of new capital, compensating for one-fifth of the previous week’s USD$2.8 billion net outflows. The cash influx is mainly propelled by the Direxion Daily CSI China Internet Index Bull 2x Shares ETF (CWEB) experiencing significant inflows week-to-date. In fact, CWEB netted USD$346 million in inflows and took the first spot on the top receivers list as investors raced to ride the short-term gains made available to them. 

‘China Digitalization’ and ‘China Disruptive Technology’ are the only two themes following the ‘Emerging Markets Awakening’ trend. ‘Energy Infrastructure’ pulled in USD$117 million of investor capital as Europe’s new energy infrastructure begins to emerge. The European Commission showcased a new EUR$300 billion plan in an attempt to decrease the EU’s dependency on Russian fossil fuels before 2030. The trend ‘Infrastructure’ netted USD$706 million in inflows over the last week to be crowned the top flow receiver amongst the 13 different trends. ‘Emerging Markets Awakening’ came in third in terms of the highest weekly inflows. The trend secured USD$417 million in net inflows, most of which came from investments in the ‘China Digitalization’ theme, which netted USD$399 million. ‘China Disruptive Technology’ was the only other theme attracting new capital, bringing in USD$29 million of net inflows. All the other themes capturing the ‘Emerging Markets Awakening’ investment opportunity failed to attract investors, with net outflows totaling USD$12 million last week.

ETFs in play:

• China Consumer Growth ETFs
• China Digitalization ETFs
• China Disruptive Technology ETFs
• China Fundamental Economy ETFs
• China Life Sciences ETFs
• China New Economy
• Emerging Markets Awakening
• Emerging Markets Consumer Growth
• Emerging Markets Digitalization
• Emerging Markets Disruptive Technology
• Emerging Markets Future Mobility
• Emerging Markets Infrastructure
• Sustainable Development Projects

Global investors stormed the crypto space 

Earlier last week, the Mexican fast-food chain “Chipotle” announced that it is joining the fleet of restaurants accepting cryptocurrency payments. All payments will be processed using the Flexa app in any of the nearly 3,000 Chipotle restaurants in the U.S. The digital payments platform supports payments in Bitcoin, Ether, and ninety-six other cryptocurrencies. Global investors streamed millions of cash flows into the ‘Cryptocurrency’ theme as Bitcoin ended its nine-week streak of negative returns, and Ether gained almost 1.22% over last week. The flagship cryptocurrencies’ prices, Bitcoin and Ether, aspired to stabilize over-improving investor sentiment. 

The ‘Cryptocurrency’ theme was the second most popular in the thematic universe. Investors poured USD$316 million of net inflows into ETFs following the theme. The trend appeared to be driven mainly by cash influx into Cryptocurrency ETFs domiciled in Canada. The top 3 flow leaders were domiciled in Canada, the jurisdiction where Bitcoin ETFs – and other cryptocurrencies – are allowed to trade on a spot basis instead of futures. The USD$263 million 3iQ CoinShares Ether ETF (ETHQ) pulled in USD$111 million, the USD$690 million 3iQ CoinShares Bitcoin ETF (BTCQ.U) attracted USD$87 million, and the USD$797 million Purpose Bitcoin ETF (BTCC.U) USD$7 million. The ‘Digital Infrastructure and Connectivity’ trend took second place in terms of highest weekly inflows, securing USD$431 million in net inflows mostly from investments in the ‘Cryptocurrency’ theme and the ‘Cybersecurity’ theme netted USD$199 million in inflows across 21 ETFs. Additionally, themes such as ‘Next Generation Internet’ and ‘Fintech’ managed to attract a combined USD$50 million. Other ETFs aligned to the ‘Digital Infrastructure and Connectivity’ investment opportunity failed to attract investors, with net outflows totaling USD$133 million last week. 

ETFs in play:

• At Home ETFs
• Cryptocurrency ETFs
• Cybersecurity ETFs
• Digital Infrastructure and Connectivity
• eCommerce ETFs
• Fintech ETFs
• Next Generation Internet

Data for this article is as of June 2nd, 2022.