ETF Outlook for Thursday, November 7, 2013 (SOCL, TWTR, EMFM, FAN, SLX)
ETF Outlook for Thursday November 7, 2013
Global X Social Media ETF (NYSE: SOCL)
The much-anticipated IPO of Twitter (NYSE: TWTR) begins trading Thursday on the New York Stock Exchange. The first day should be wild as many experts expect the stock to open well above where the IPO is finally priced.
Most expect TWTR to price in the high $20’s before it opens higher. While individual investors will be racing to get into the shares of the social media darling, the ETFs will be sitting back and waiting for their opportunity.
SOCL will wait five days before it adds TWTR to its portfolio, where it will join Facebook (NASDAQ: FB) and LinkedIn (NASDAQ: LNKD). Also buying after the fifth trading day is the Renaissance IPO ETF (NYSE: IPO), which began trading two weeks ago. The First Trust U.S. IPO Index ETF (NYSE: FPX), which has had a great year, will wait until December 20 before it decides if it will add TWTR to its portfolio.
By waiting to enter FB when it when public, FPX made a great decision because the shares fell below the original IPO price a few months after it began trading.
Global X Next Emerging & Frontier ETF (NYSE: EMFM)
Launching today, this ETF takes a new approach to investing in emerging markets. By focusing on both emerging and frontier markets EMFM expands the countries available to be included in the ETF.
The one twist is that the BRIC (Brazil, Russia, India, and China) are excluded as well at Taiwan and South Korea. The index has approximately 200 stocks from countries such as Chile, Indonesia, Mexico, Poland, Turkey, and Vietnam. The ETF charges an expense ratio of 0.58 percent.
FirstTrust Global Wind Energy ETF (NYSE: FAN)
The biggest gainer on the pan-European Index yesterday came from Vestas Wind Systems (OTC: VWDRY) after it reported a smaller loss than the previous quarter. The turnaround story for largest maker of wind turbines in the world was enough to send the Danish stock up 15 percent. The stock is the number two holding in FAN, making up 9.25 percent of the portfolio.
The ETF was one of the biggest winners yesterday, rallying 3 percent on the news. FAN is now up 66 percent on the year and trading near a 30-month high. The wind energy movement may not be sustainable long-term, but it does have the wind at its back in the short-term.
Market Vectors Steel ETF (NYSE: SLX)
After the bell yesterday, Vale (NYSE: VALE) reported that more than doubled from a year earlier. The mining giant saw iron ore shipments increase by 7 percent as the price of bulk iron ore rose by 12 percent. With VALE making up 12.8 percent of SLX it is evident the ETF will be moving with the stock once it opens today. After hours the stock was up slightly in light trading.
The numbers were great, but with VALE already up 35 percent from the July low the report may already be baked into the price of the stock. SLX has enjoyed similar success recently and if it can break above $51.25 it would signal a major breakout for the sector.
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