In the Era of 'Carbon Neutrality', Raw Material Rally... Which ETFs Are Rising Rapidly After Crude Oil?

[Asia Economy Reporter Ji Yeon-jin] Inflation caused by the power shortage faced during the major transition to 'carbon neutrality' and eco-friendly energy is the biggest factor pressuring the stock market recently. The spread of inflation has dampened investment sentiment due to concerns over monetary tightening by the U.S. Federal Reserve (Fed). The tense situation between Russia and Ukraine is also escalating the energy crisis and increasing volatility in asset markets. However, as concerns over recent peak energy prices have emerged, industrial metals-related exchange-traded funds (ETFs) are emerging as alternative investment destinations.

According to the financial investment industry on the 18th, the S&P GSCI sub-industrial metals sector, a benchmark in the U.S. commodity market, recorded an 8.31% return year-to-date as of the 16th (local time). This is due to the surge in demand for metals related to eco-friendly energy and China, the largest consumer, announcing economic stimulus this year. Due to the characteristics of industrial metals, global inventories are decreasing, and the 'backwardation'?where futures prices are lower than spot prices?supports supply shortages and price strength.

During last year's global power shortage, aluminum prices showed strength compared to metals like copper and nickel. Since the electrolysis process accounts for about 40% of aluminum production costs, aluminum, an energy-intensive industrial metal, rises in tandem with energy prices such as oil and gas. This year, aluminum prices have risen 15% alongside the surge in international oil prices. Hwang Byung-jin, a researcher at NH Investment & Securities, said, "As long as the energy transition and decarbonization policies continue under the long-term carbon neutrality goal, the industrial metals sector remains an attractive investment." He added, "The tight physical supply and demand causing seasonal inventory stocking delays continue to support price downside rigidity, and the improvement in physical demand during the peak season (after the Winter Olympics), led by China, will add momentum to the industrial metals sector's strength." He maintained a 'weight increase' opinion on industrial metals investment and recommended a buying strategy during short-term corrections. SK Securities also stated that "despite continuous new highs, the outflow of funds from crude oil ETFs and the reduction of speculative net long positions in crude oil indicate that many market participants already have concerns about the peak in oil prices," and judged that "industrial metals have further upside potential due to green infrastructure investments by major countries."

Currently, in Korea, investment is only possible through the 'TIGER Metal Futures (H) ETF.' In the U.S., there are 'Invesco DB Base Metals Fund (DBB)' and in the U.K., the 'WisdomTree Industrial Metals ETC (AIGI)' is listed. Their year-to-date returns as of the day before yesterday are 9.47%, 7.88%, and 7.37%, respectively.

This content was produced with the assistance of AI translation services.