There are only a couple of sessions left until we shut the door on 2020. Volume has been light which is the norm during the Holiday season. There has been volatility, driven by headlines around a potential $300 bln addition to the $900 bln stimulus signed by President Trump late Sunday night. While the markets have been fixated on this bill, it would appear another news story is garnering the attention of Financial Advisors.
- Trivia Question- What is the oldest Dow Jones Industrial Average component? (Answer below)
One of the key themes FAs will be watching in 2021 is how the Chinese government will regulate the growing power of its tech industry. Scrutiny around the FinTech group increased following a speech by Jack Ma which the Communist Party viewed as questioning its direction and authority. This led to Chinese officials putting an end to Ma’s initial public offering of Ant Financial.
Shares of Alibaba (BABA) have seen a surge in volatility since that decision. BABA broke below key support on December 24 following news that Chinese regulators announced an anti-monopoly investigation into the company. Financial Advisors are paying attention as two ETFs that saw a surge in interest were the WisdomTree Emerging Markets ex- State-owned Enterprises (XSOE) and the Direxion China Internet Bull (CWEB).
TrackStarIQ Data
Here are some highlights of research surges* this week –
| RANK | TOP ETFS – BY ALL FAs (Surge Traffic) This Week | Ticker | TOP STOCKS- BY ALL FAs (Surge Traffic) This Week | Ticker | TOP INDUSTRIES BY ALL FAs (Surge Traffic) This Week | TOP ETF CATEGORIES BY ALL FAs (Surge Traffic) This Week |
|---|---|---|---|---|---|---|
| 1 | WisdomTree Emerging Markets ex-State-Owned Enterprises Fund | XSOE | Aerocentury Corp | ACY | Motor vehicle supplies and new parts | Metals |
| 2 | ProShares K-1 Free Crude Oil Strategy ETF | OILK | Atif Holdings Ltd | ATIF | Retail-Retail Stores, NEC | Commodity Producers |
| 3 | Vanguard Energy ETF | VDE | Regional Health Properties Inc | RHE | Real Estate | Water Equities |
| 4 | Global X Silver Miners ETF | SIL | Aprea Therapeutics Inc | APRE | Internet Retail | Preferred Stock/Convertibles |
| 5 | First Trust TCW Opportunistic Fixed Income ETF | FIXD | EGF THERAMED HEALTH CORP. | EVAHF | Home Improvement Retail | Hedge Fund |
| 6 | Direxion Daily CSI China Internet Index Bull 2x Shares | CWEB | Therma Bright Inc. | THRBF | Pay TV | Volatilty Hedged Equity |
| 7 | WisdomTree US High Dividend Fund | DHS | Grom Social Enterprises, Inc. | GRMM | Tobacco | Commodities |
| 8 | VanEck Vectors Video Gaming and eSports ETF | ESPO | China Recycling Ener | CREG | Insurance – Life | Leveraged Bonds |
| 9 | iShares Exponential Technologies ETF | XT | Acamar Partners Acquisition Corp Cl A | ACAM | REIT – Office | Latin America Equities |
| 10 | SPDR Barclays 1-3 Month T-Bill ETF | BIL | Avalon Holdings Corp | AWX | Copper | High Yield Bonds |
| 11 | Amplify High Income ETF | YYY | Marine Petroleum U | MARPS | Integrated Freight & Logistics | Utilities Equities |
| 12 | iShares U.S. Medical Devices ETF | IHI | National Capital Bank of Washington (DC) | NACB | Insurance – Property & Casualty | China Equities |
| 13 | First Trust Preferred Securities and Income ETF | FPE | GREENSTAR BIOSCIENCES CORP. | GTSIF | Apparel Manufacturing | Foreign Large Cap Equities |
| 14 | iShares PHLX Semiconductor ETF | SOXX | Unisys Corp | UIS | Japan Equities | |
| 15 | Invesco S&P Ultra Dividend Revenue ETF | RDIV | Flux Power Holdings Inc | FLUX | Global Equities | |
| 16 | First Trust Capital Strength ETF | FTCS | Star Jets International, Inc. | JETR | Consumer Staples Equities | |
| 17 | SPDR Barclays Capital Investment Grade Floating Rate ETF | FLRN | Flux Power Holdings, Inc. | FLUX | Industrial Equities | |
| 18 | Invesco Dynamic Software ETF | PSJ | Universal Security Instruments Inc | UUU | Consumer Discretionary Equities | |
| 19 | Global X DAX Germany ETF | DAX | ADM Endeavors Inc. | ADMQ | ||
| 20 | Nationwide Risk-Managed Income ETF | NUSI | Immersion Corp | IMMR |
The XSOE is based on the premise that private companies are able to outperform companies controlled by the government. A SOE is defined as a company that is 20%+ controlled by the government. The Expense Ratio is on the low end at 0.32% and is offset by the Distribution Yield of 1.05%. Hong Kong has the top geographical coverage at 32% followed by South Korea (13%), Taiwan (13%) and India (12%). If you are curious, China is only 7% in weighting, however, BABA (7%) and Tencent Holdings (TCEHY, 6%) are the two heaviest weighted companies. Technology makes up 45% of the fund. The XSOE is up 25% Year-to-Date (YTD) with shares accelerating at the end of the year after breaking key resistance at $34 on the monthly chart. The XSOE is attempting to grind through $40 on the daily as it enjoys a steady upward trend.
CWEB is a 2x leveraged daily exposure to overseas-listed Chinese internet companies. It has returned 103% YTD but the Expense Ratio is lofty at 1.30%. Due to the leverage and high cost, it is not a long-term hold. This suggests that FAs were interested in a short-term exposure to the group after a bout of selling around regulatory concerns. Average Daily Volume is 48K with Average Daily $ Volume at $2.86 mln so there is enough volume for trading.
Trivia Answer- General Electric (GE) was added on November 7, 1907, making it the oldest DJIA component.