Exchange traded funds (ETFs) were stuck in a lull at the beginning of the quarter. The markets soon struck a more positive note to wrap up the third quarter in a strong way. Let’s take a look at what ETFs investors were focusing on in the third quarter.
Sugar. Speculation on rising demand for sugar in Asia is taking sugar prices higher – for the moment. Tightness in the market has been seen in places such as the Philippines, which may auction rights to import 100,000 metric tons of it. Pakistan is allowing traders to import 500,000 tons without duties until Nov. 30. Prices may rally 12% in the fourth quarter, based on Asian and Middle Eastern demand. Brazil forecasts even more: sugar cooperative Copersucar SA said sugar prices could surge 30% on robust demand, weak crop yields and transportation issues. [Climate for the Sugar ETN Gets Spicy.]
- iPath Dow Jones UBS Sugar TR sub-Index (NYSEArca: SGG): up 54.9% in Q3
Copper. Copper prices are believed to signal turning points in the global economy. Since the metal bottomed on June 9, it’s up about 24%. During the same period, the S&P 500 has risen only 5.1%. One analyst says that given copper’s tremendous jump in recent months, it may be due for a pullback. Credit Suisse just got bullish on the metal, saying it could soar to $10,000 a ton by 2012. The forecast is backed by supply and demand: inventory has been declining nearly all year, even though right now should be the re-stocking period for copper. [What Copper ETFs Say About the Economy.]
- Global X Copper Miners (NYSEArca: COPX): up 48.3% in Q3
- First Trust ISE Global Copper (NASDAQ: CU): up 46.5% in Q3
Thailand. Investors are flocking to global ETFs while they wait for the U.S. recovery to sort itself out. Leading the charge were a number of emerging markets funds. The Thailand Development Research Institute projects that the Thai economy could grow 6.4% to 7.2% this year, according to MCOT. The economy is estimated to expand by 3.5% to 7.1% for 2011. Inflation is expected to stay within 3% to 3.5% for 2010. The only risk to the country’s growth may come in the third or fourth quarter if political violence escalates.
- iShares MSCI Thailand (NYSEArca: THD): up 34.7% in Q3
Poland. An investor may consider frontier markets because they may experience rapid economic growth, the economies have low or no correlation with emerging and developed markets, and these countries store a large supply of natural resources. Developing markets account for an increasingly larger piece of the global market cap.
- iShares MSCI Poland Investable Market Index Fund (NYSEArca: EPOL): up 34.3% in Q3
Solar. The sun and its energy are on many investor’s minds, and China may be the driving force behind these funds. China’s National Energy Administration has taken bids from solar-power developers to build out 13 projects around the country that will add 280 megawatts of solar power capacity. China plans to devote $738 billion over the next decade to cleaner energy sources, and has already made substantial progress. [The Powerful Force Behind Solar ETFs.]
- Market Vectors Solar Energy (NYSEArca: KWT): up 34.2% in Q3
- Claymore/MAC Global Solar Index (NYSEArca: TAN): up 33.5% in Q3
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.