Gold Mining ETF Macro Outlook | September
Today, the world economy is greatly affected by how things are going for China. China's growth has, in recent years, slowed down significantly after their extremely harsh covid lockdowns. This has led to reduced demand for many goods/products/raw materials, which in turn affects the entire world economy.
There is also significant concern that Chinese real estate company Evergrande's financial problems, which emerged as early as 2021, continue to infect other parts of China's already weak economy. The country's real estate sector makes up as much as 30 percent of the gross domestic product (GDP). More recently, alarming reports about the condition have also come from China's largest non-state real estate behemoth, Country Garden, which has been forced to suspend its payments.
The market has been waiting for support and stimulus from the Chinese state for several months, and now they are finally here. Lower interest rates, helicopter money and quantitative easing, are to be or have already been implemented. This is the catalyst to kick start China again, which is now the world's engine in terms of industrial production. China's current weakness is priced in by the stock market, and this newly launched offensive will, in the future, support commodity demand and, at the same time, create further monetary inflation.
There is also a need to further stimulate the economy (and births of new children) in the face of the demographic problems that China will suffer from for many years after the one-child policy since 1979. They are fast approaching the same problems that Europe is facing, which is a skewed distribution between the proportion of workers in relation to the non-working part of the population.
China has also been communicating that they want to reunite Taiwan with "mainland" China. This can only be achieved by force, and there are now clear signals of military preparations from China. From a purely tactical point of view, unfortunately, it is probably better for China to do it within the next year than to wait - if they really intend to take that step.
Sources available upon request. When you invest in ETFs your capital is at risk.
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1M
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3M
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6M
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YTD
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12M
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2Y
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SI
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AuAg ESG Gold Mining UCITS ETF (ESGO)
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-7.71%
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-7.13%
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3.81%
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-2.18%
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27.58%
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-10.44%
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-14.94%
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Solactive AuAg ESG Gold Mining Index
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-7.68%
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-6.98%
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4.25%
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-1.55%
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28.72%
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-9.26%
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-13.82%
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Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31/08/2023
Performance before inception is based on back-tested data. Backtesting is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such a strategy would have been. Back-tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. When you invest in ETFs your capital is at risk.