ETF Trading Report: Emerging Bond, China Yuan ETFs In Focus (CYB, PCY)

Eric Dutram: American markets weren’t able to keep up last week’s momentum as stocks were unable to hold onto gains at the close. Thanks to this, the Dow finished lower by three points, the S&P fell by a single point, while the Nasdaq tumbled 12 points, or 0.4% on the session.

In terms of sector performances, it was a pretty mixed day across the board, although investors did see some strength in the consumer goods, and independent oil and gas segments. Meanwhile, in the red, investors saw big banks, health care, and some of the large tech names lead the way on the downside (readDo ex-Financial Funds Make Safer Dividend ETFs?).

Treasury bond investing saw decent inflows once again, as the Ten Year trended down to the 1.50% mark, while investors also saw yields decrease in much of Europe as well. For commodity trading, it was largely mixed, although softs and precious metals did see some modest increases while crude oil declined to the $90/bbl. level.

ETF trading was moderate-to-light across many of the sectors, as most of the big name products saw lower-than-average volume levels. Investors did see, however, outsized interest in the U.S. sector market, a few currency funds, and a couple of the style box ETFs as well (read Mid Cap ETF Investing 101).

One ETF in particular that saw outsized volume interest was the WisdomTree Dreyfus Chinese Yuan ETF (NYSEARCA:CYB) which saw volumes nearly 20 times the daily average. Still, despite the heavy volume, CYB finished the day in a narrow range, losing just one cent on the day (read China Currency ETFs: Slow and Steady Growth in 2012?).

Interestingly, more than half of the volume came in a block trade just after 2PM at the low point of the fund during Monday’s session. Also, it should be noted that the other China currency ETFs saw strong trading while the most popular China equity ETFs saw volume levels far below normal, suggesting a shift to the yuan as the preferred way to play China, at least in the short term.

(Currently, CYB has a Zacks ETF Rank of 2 or ‘Buy’)

Another fund which saw outsized trading interest on the day was the PowerShares Emerging Markets Sovereign Debt Fund (NYSEARCA:PCY). This product usually does about three quarters of a million shares during a normal day, but experienced a volume spike to over 2.1 million during Monday trading (read Emerging Markets Sovereign Bond ETFs: Safe with Attractive Yields).

Volume was pretty well spread out across the day, although a large block trade of about 290,000 shares did hit the wires around the mid day period. Investors also saw solid volume days in a number of other products in the space, although none of these other contenders really saw the level of volume or price increase that was seen in PCY during the week’s opening session.

Author is long PCY.

Written By Eric Dutram From Zacks Investment Research

In 1978, Len Zacks discovered the power of earnings estimates revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank, a peerless stock rating system whose Strong Buy recommendation has an average return of 26% per year.

Leave a Reply

Your email address will not be published. Required fields are marked *