Metals manufacturers and miners have reason to rejoice: auto sales around the world are skyrocketing, particularly in emerging markets with growing middle classes. Exchange traded funds (ETFs) are a great vehicle (ha!) to get exposure to the reinvigorated market.
The auto market has good reason to feel optimistic heading into earnings season.
- AK Steel (NYSE: AKS) reported earnings in line with expectations, citing improved momentum in the auto market. Nucor Corp. (NYSE: NUE) also returned to profit after three consecutive losses, surpassing U.S. Steel Corp. (NYSE: X). [Why coal and steel are set in 2010.]
- U.S. chemical maker DuPont Co. also reported an expectation-beating fourth-quarter profit that surged past analysts’ estimates, reports Jack Kaskey for BusinessWeek. DuPont also cited auto demand, which increased the need for its automotive plastics and electronics materials.
- Corning Inc. (NYSE: GLW) reported that fourth-quarter net income almost tripled partly on demand for emission-control products as the auto industry builds supplies.
While sales in the United States are still tepid, take a look at what’s happening globally:
- It’s predicted that Brazil, Russia, India and China (BRIC) will account for 30% of the world’s auto sales in 2014, reports the Economic Times.
- Toyota (NYSE: TM) has implemented an ambitious plan see its annual global sales rise this year for the first time in three years. The United States and Japan are expected to drive the growth.
- GM is anticipating that it will need a new plant in China as sales rise there. China is the world’s largest auto market – sales of GM cars in China last year shot up 66.9% from 2008, says Reuters.
- European auto registrations are up, rising 16% in December compared with the same month a year earlier, according to the European Automobile Manufacturer’s Association. [Platinum is becoming as popular as gold.]
There’s no direct way to play the auto market with ETFs. Until there is, investors will have to content themselves with funds that offer broader exposure to the industry’s growth, including via the funds below.
For more stories about steel, visit our steel category.
- Market Vectors Steel (NYSEArca: SLX)
- ETFS Physical Platinum Shares (NYSEArca: PPLT)
- iPath Dow Jones AIG Platinum TR Sub-Index ETN (PGM)
- E-TRACS UBS Bloomberg Long Platinum ETN (PTM)
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.