In the materials space, a rare earth and strategic metals-related exchange traded fund has surged as improving technologies raise demand for rare earth metals.
The VanEck Vectors Rare Earth/Strategic Metals ETF (NYSEArca: REMX), which is comprised of global companies involved in producing refining and recycling rare earth and strategic metals and minerals, was up 2.7% Wednesday and rallied 39.4% year-to-date.
The sub-sector strengthened Wednesday after China started stockpiling rare earth metals for strategic reserves, raising concerns over Beijing’s control over the coveted resources, AFP reports.
China produces over 90% of the world’s rare earths, which are used in hi-tech equipment like iPods to missiles. The country has also set production caps and export quotas on the metals, which has contributed to the rising prices. The EU, U.S. and Japan have even petitioned the World Trade Organization, claiming China is unfairly choking off exports to benefit domestic industries.
According to the China Securities Journal, Beijing has started strategic buying of rare earths due to the low prices.