Market Overview

A $96 Million Bet On The UK Stock Market?

A $96 Million Bet On The UK Stock Market?

The British pound is tanking due to ongoing uncertainty and concerns involving Brexit yet the largest U.S.-listed U.K. exchange-traded fund saw an inflow of $96 million on Tuesday.

According to Bloomberg, the iShares MSCI United Kingdom Index (ETF) (NYSE: EWU) saw its largest single day inflow in more than a year and one expert is speculating it was done by a single investor.

Eric Balchunas, an ETF analyst at Bloomberg Intelligence, suggested that the inflow was likely done by a single institutional investor who wants exposure to large-cap U.K. stocks.

The transaction occurred in one trade. At 9:54:43, 443,075 shares of the exchange traded fund were bought at a price $15.40 each.

Balchunas said that this investor is likely "betting on a rebound in the pound but with a little tailwind from the post-Brexit rally we've seen in U.K. stocks."

The U.K.'s main stock index, the FTSE 100 is up more than 13 percent since the start of the year. Companies in the index are large-cap multinational firms that are better positioned to outperform small-cap domestic focused companies.

Bloomberg did note it's possible the investor has a substantial short position in the pound which they are looking to offset.

The WisdomTree United Kingdom Hedged Equity Fund (NYSE: DXPS), a U.S.-listed hedged equity ETF with exposure to U.K. assets has gained around 17 percent since the start of the year and has benefited from the decline in the British pound and the FTSE stock market rally.


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