Global ETF Strategy Weekly Global ETF Commentary · Any reference to any specific company,...

1. "The ETFs specifically mentioned herein may not be recognised, authorised or otherwise registered in Singapore for retail distribution. This research is intended for general

circulation only and its contents do not take into the specific investment objectives, financial situation or particular needs of any particular person. Before deciding to

purchase any ETF, an investor should seek advice from a financial adviser regarding the suitability of the investment product, taking into account his specific investment

objectives, financial situation and particular needs.”

2. “DBS, in publishing this research on ETFs, and DBSV in circulating the research, are not and should not be taken or considered as having made an offer, recommendation or

solicitation to buy or sell the ETFs or to enter into a transaction or to participate in any particular trading or investment strategy. Any reference to any specific company,

financial product or asset class in whatever way is used for illustrative purposes only and does not constitute a recommendation on the same.”

sa: JG, PY, CS

Regional Research Team equityresearch@ dbs.com

Key Global Market Indicators

KEY GLOBAL MARKET INDICATORS As of April 13, 2018

Value/Price Wk Chg % YTD Chg %

MARKETS

MSCI WORLD 2,088.98 1.76 -0.69

MSCI EAFE 2,042.41 1.45 -0.41

MSCI Emerging Markets 1,170.09 0.70 1.00

USA: Dow Jones Industrial

24,360.14 1.79 -1.45

S&P 500 2,656.30 1.99 -0.65

NASDAQ 7,106.65 2.77 2.94

EUROPE-Euro Stoxx 50 3,448.00 1.17 -1.60

CHINA-Shanghai SE 3,159.05 0.89 -4.48

JAPAN-Nikkei 225 21,778.74 0.98 -4.33

SINGAPORE 3,501.30 1.71 2.89

CURRENCIES

US DOLLAR INDEX (DXY) 89.7700 -0.38 -2.56

USD/CNY 6.2750 -0.45 -3.56

EUR/USD 1.2331 0.41 2.72

USD/JPY 107.3500 0.39 -4.74

USD/SGD 1.3121 -0.28 -1.79

COMMODITIES

GOLD per oz. 1,346.20 0.99 3.33

OIL per bbl. WTI 67.39 8.59 11.50

BONDS Wk bp Chg YTD bp Chg

US Treas 10-Yr Gov't Yld 2.8267 5.32 42.13

US Treas 2-Yr Gov't Yld 2.3566 9.05 47.36

China Gov’t 10-yr Yld 3.7240 -7.20 -20.20

JGB 10-yr yield 0.0380 -0.80 -1.00

Germ Bund 10-yr yield 0.5110 1.40 8.40

% Change in MSCI Indices 4/6/2017 to 4/13/2018 (in US Dollars) Source: ETF Asia Analytics, Inc., Bloomberg Finance L.P., MSCI, as of April 13, 2018

• In a speech given by IMF Managing Director Christine Lagarde in

Hong Kong, she warned that the world’s trading order is in

danger of being eroded and dismantled with the increasing use of

trade tariffs, theft of intellectual properties, quotas, subsidies and

other forms of protectionist and mercantilist policies employed by

national governments. An encouraging sign is a pledge from

Chinese President Xi Jinping at the Boao Forum for Asia to lower

auto import tariffs, ease foreign restrictions on foreign ownership

in the auto industry, encourage normal technological exchange

with regard to intellectual properties and protect ownership rights

of foreign investors and further open up the financial sector.

DBS Group Research. Equity 16 Apr 2018

Global ETF Strategy

Weekly Global ETF Commentary Refer to important disclosures at the end of this report

Weekly Global Market Wrap

Global stock markets during the week coped with big

headwinds from geopolitical worries such as trade tensions

and Syrian conflicts. White House politics and the prospects

of rising interest rates made investors feel that these factors

could indeed slow the market’s advance. Rising rates were

indeed confirmed by the recently released Federal Reserve

Open Market Committee minutes of the March meeting

which showed a US economy that is expanding at faster than

previously forecasted as the labor market continues to

strengthen and consumer price inflation ticks up. The March

dot plot of interest rate forecasts remained at 2.1% for year-

end 2018 but was raised to 2.9% (from 2.7%) for 2019 and

to 3.4% (from 3.1%) for 2020 with the possibility of more

aggressive monetary tightening by the Fed during the next

three years. The unknowns include the amount of boost from

the tax cut and the potentially negative effect from a US-

China trade confrontation. While the Federal Reserve’s

preferred inflation rate, the personal consumption

expenditure (PCE) index remains at 1.8% in February

compared with a year ago, the March core consumer price

index (CPI) which excludes food and energy increased 2.1%

and the broader all-items CPI rose 2.4% as average hourly

wage gained 2.7% in March, according to the Labor

Department.

• Geopolitical risks including the use of chemical weapons

in Syria, the US and allies retaliation by launching over

100 Tomahawk missiles at Syria, Saudi Arabia’s

interception of three missiles from Yemen, the trade

war being threatened by the US on China and President

Trump’s on-going political problems in Washington, DC

have rattled the equity and oil markets. Last week’s

strong earnings results from JP Morgan and Citigroup

failed to calm the markets. With earnings reporting

season upon us, FactSet estimates that first quarter

2018 earnings of the companies in the S&P 500 will rise

by 17.3% and revenues to increase by 7.4%. For all of

2018, earnings are forecasted to increase by 18.4% and

revenues by 6.7%. Forward P/E is estimated at 16.4

times compared with the 10-year average of 14.3 times.

Typically, a better than expected results has a positive

impact on the markets.

Global ETF Strategy

President Trump’s deliberations about the possibility of

rejoining the Trans-Pacific Partnership could be a positive

development, if pursued

• The University of Michigan survey reported a decline in

the consumer confidence index to 97.8 in April from

101.4, a 14-year high in March. The drop reflected

worries that the trade tariffs could have a dampening

effect on the US economy, the stock market’s weakness

over the last few months and recent adverse political

headlines. Current economic conditions index dropped to

115.0 from 121.2 as expectations about inflation rose

slightly and the tax cut benefits of households may have

been lower than expected.

• The US initial jobless claims decreased by 9,000 to

233,000 according to the Labor Department and has

now been below 300,000 for 162 weeks, a record

especially as the labor force is much larger now than it

was in the 1970’s.

• The Commerce Department reported that US wholesale

inventories increased 1.0% in February from a rise in

January of 0.9%, the largest gain since October 2013.

Durable goods, machinery, professional equipment and

computer equipment were all up while autos inventories

declined. Wholesale inventories have average 0.38% in

the last 25 years with a high of 2.1% in 2010 and a low

of -2.0% in 2009.

• WTI oil prices jumped 8.59% to $67.39 per barrel while

Brent crude rose by 8.15% to $72.58 per barrel last

week on heightened political tensions in the Middle East

as Saudi Arabia reported that they had intercepted

missiles over Riyadh and as the US launched missiles at

Syria in response to its chlorine and sarin gas attack on

Douma. Over the previous week, US commercial crude

oil inventories rose by 3.3. million barrels to 428.6 million

barrels while total motor gasoline inventories increased

by 0.5 million barrels. The International Energy Agency

stated that world’s oil supply declined by 120,000 barrels

per day to 97.8 million barrels per day in March as a

result of OPEC’s output reduction. IEA estimates that

commercial crude inventories in OECD countries declined

by 25.6 million barrels to 2,841 million barrels, the

lowest level in three years. Baker Hughes reported the

number of active oil drillings rigs operating in the US rose

by 7 to 815 last week compared with an increase of 11

the week before. Total rig count including oil and natural

gas drilling increase by 5 to 1,008.

• The US Dollar Index (DXY) against a basket of major 16

currencies was down 0.38% over the five-day trading

period dominated by uncertainty in the Middle East, from

the trade issue and weakening of the growth cycle. The

dollar has fallen for five straight quarters and down

2.56% YTD. The euro however strengthened 0.41% to

$1.2331 against the US dollar despite signs of sputtering

growth in the Eurozone area. The Japanese yen was

weaker by 0.39% to 107.3500 against the US dollar

while the Chinese yuan strengthened 0.45% to 6.2750

against the US dollar. Russian currency was the worst

performer for the week, down 7% as investors fretted

on the impact of US sanctions imposed on the country.

The factors driving global currencies are ever changing as

global capital flows tends to seek higher yielding

currencies. The recent dollar decline is a mirror image of

the global risk appetite where non-US investors would

rather stick to their domestic assets than invest more

funds into US assets. Escalating trade tensions with US

protectionist risks and uncertainties from political

developments are also presents risks for trade partners in

holding US assets. We see the US dollar gaining some

upside support yet capped as non-US central banks move

toward normalizing policy and whether the US yield

differential will drive other economies has yet to be seen.

This keeps our view on the dollar as neutral,

fundamentally and technically vulnerable at this stage of

the cycle.

• The yield on the 10-year US Treasury note was up 5.32

bps to 2.8267% for the week, its second straight weekly

gain reflecting improved risk appetite from investors who

often buy Treasuries during times of economic or political

uncertainties as they offer steady interest payments with

essentially no credit risk. Yields fall when bond prices

rise. The yield on the policy sensitive two-year Treasury

note was up 0.05bps to 2.3566%, its highest level since

August 2008 while the gap between the two and 10-

year yield was the lowest level in more than 10 years.

Meanwhile, minutes from the Federal Reserve March 20-

21 meeting released this week showed the Fed officials

confidence in hitting their 2% inflation target this

coming year. At this meeting, Federal funds rate

benchmark was raised in a range between 1.3%-1.75%

while investors feel that the Fed could raise rates as

much as three times more. In Europe, the 10-year

German government bund rose 1.40 bps to 0.5110% as

inflation remains muted in Europe. The Japanese JGB 10-

year yield was down 0.80 bps to 0.0380%. BOJ’s

Global ETF Strategy

inflation target calls for a sustained 1% rise and

continues to support its ongoing accommodative

monetary policy. The Chinese Government 10-year bond

yield was down 7.20 bps to 3.7240%. We see yields

climbing further driven by rising inflationary expectations

and assessment of real long-term growth..

Food for Thought: In Order to be Trusted, One Must Trust

As the publisher of the Washington Post, Katherine Graham

was the highest salaried and arguably the most influential

woman in the USA during her time. Yet she came to the

position ill prepared when the untimely death of her husband

forced her to assume management of the family newspaper. A

middle-sized housewife, Graham had to win the respect of

everyone from senior editors to press operators and circulation

managers. But with the help of trusted advisers, she quickly

proved herself a strong leader. Under Katherine Graham, the

Washington Post became a media empire and her employees

eventually dubbed her Katherine the Great. She instinctively

grasped the importance of surrounding herself with people

who were experts in their specialties. She then delegated both

the responsibility and the authority for achieving her goals. By

accepting responsibility, she earned their trust. We fear the

consequences of delegation and exaggerate the fear of losing

control. In so doing, failure to trust limits our effectiveness. In

order to be trusted, I must trust and remember the words of

Johann Wolfgang van Goethe:

“Treat people as if they were what they ought to be, and

you help them become what they are capable of being.”

Weekly Global Investment Theme Focus; Earnings Season and

Implications on Financial Exchange Traded Funds (ETFs)

Overview. The year 2017 ended more bullish than anticipated

where most asset classes performed extremely well with

double digit returns. This historical bull market was supported

by above trend global growth, global earnings surging, low

volatility and low inflation with accommodative fiscal and

monetary policy.

So far, the tone for the first quarter 2018 could have been

more different with concerns on, protectionist trade tensions,

geopolitical Mideast conflicts in Syria, hawkish Fed policy with

rising rates and rising volatility, thus hurting stocks and bonds

with the decline of the S&P 500 index of 1.22%, the first

quarterly decline since 2015. The first two weeks in April has

been rocky as well. What next for the rest of 2018? In this

environment, we expect more muted returns and higher

volatility but earnings matter most rather than multiple

expansion as key driver of equity returns. A fundamental fact

for practitioners in the world of investing is that of all the

factors affecting stock price, profitability is the most important

and earnings per share (EPS). Profitability per share is

measured by dividing a company’s total after tax revenues by

the number of shares outstanding which can be boosted by

share buybacks and stronger operating revenues. Also, as

written in the US financial history books over the past 30 years

of bubbles, market meltdowns and credit crisis, earnings per

share and share prices have tracked each other almost

perfectly. We enter the 2018 spring season with optimism on

the outlook for corporate earnings reported for the first

quarter.

US Companies are expected to report earnings growth of

17.3% for the first three months of 2018, the biggest

quarterly increase in seven years, thanks to the passage of the

new tax law delivering tax rate cuts under the Trump

Administration. Broad based gains are expected to grow in all

the 11 sectors of the S&P 500 led by energy, materials,

information technology and financials. Summing up, we

expect the economic backdrop to be sustained in 2018 with

less conviction and expectations of regional divergence which

reflect geopolitical and economic uncertainties and the

maturing cycle. We continue to favor the sectors of

commodities. energy, materials, financials and information

technology. We will focus on the financial sector particularly

the banks since they were the first to release their earnings last

week and consider the investment implications for Financial

ETFs.

Highlights of the Bank Sector’s Earnings Reports

Performance. Between 2016 and year end 2017, bank stocks

rose 42% as the operating environment for lenders improved

significantly driven by the developments of lighter regulatory

mode and much lower tax rates with anticipated gradual

increases in interest rates, thus the sector outperformed the

broader market but by the first quarter of 2018, bank stocks

were trading at a higher valuation which turned off investors.

Big banks such as Citicorp, Wells Fargo underperformed while

the KBW Nasdaq Bank Index, a key benchmark for bank stocks

is roughly flat YTD but marginally better than the S&P’s decline

of 1.22%

Reported Earnings Releases. Major US banks released solid first

quarter results as delivered by JPMorgan Chase, Citicorp both

beating analysts’ estimates due to lower taxes, higher interest

rates and strong equity trading. JP Morgan’s earnings rose

35% from a year earlier while Citibank rose 13%. Yet the

shares of these banks as well as Wells Fargo fell last Friday,

Global ETF Strategy

April 13th and failed to lift the mood with the S&P 500

financial sector lagging behind the rest of the market.

Financials were off and was the worst performing sector in the

index as key constituents as JP Morgan, Citicorp and Wells

Fargo fell. Wells Fargo was marred by a warning that faces the

Bank with $1 billion penalty for mis-selling insurance products

and mortgage fees. Some observers feel that the earnings

expectations were way ahead of the actual results.

Bright Spots to consider on the outlook for Banks given these

factors are: (1) Momentum trading should lift the revenue for

banks given choppy markets. (2) Rising interest rates is

typically good for banks which profits from the differences

between rates on deposits and loans. (3) Corporate loan

growth may also help profits which still remains below its fast

pace although the recent weekly rates are more encouraging.

(4) Credit quality as the big banks are still reporting low overall

loss ratios from the increasingly debt laden American

consumer and (5) the regulatory reform where investors are

still waiting for the promises made by the Administration to lift

regulatory bundles. This week, we saw key developments such

as the planned softening for the stress tests in certain areas

while the leading Republicans and many bankers wants to

loosen post crisis rules since there has not been a major

rollback underway yet.

Investing in Financial ETFs

The Financial ETF sector presents interesting opportunities

given the prospect of rollback of major regulations, the Dodd-

Frank Act, chief among them, the tax reform cutting taxes and

paving the way for rising interest rates and inflation. Rising

rates would boost income for banks, insurance companies,

broker dealers, and real estate companies. Loan growth is

likely to push up along with strength in underwriting volume

and deal volume amid expected higher interest rates and

expect higher dividend rates for global banks.

The ETF financial sector includes publicly listed traded stocks

that provides financial services to customers. The sector ranges

from banks to asset management companies, insurance

companies, real estate investment trusts (REITs) and broker

dealer companies. If one is not inclined to filter stocks in this

broad financial sector, there are many US listed ETFs in the

financial sector as great alternatives to stock picking to hedge

your risks and gain experience in investing in the broad

financial sector.

The primary driver of investment returns in the ETF Financial

sector based strategy is the timing of the sector exposure

itself, the favorable 2018 earnings outlook and “look under

the hood’ of the Financial ETF for the specific companies and

stocks it holds in its portfolio. The current financial ETFs

available for investing are: (i) Funds that are broader than pure

banking ETFs such as Financial Select Sector SPDR (XLF),

Vanguard Financial Index (VFH) and Fidelity MSCI Financial

index (FNCL). All three resemble each other in terms of

holdings but the Financial Select SPDR (XLF) is the oldest

financial ETF with 65 stocks while the other two financial ETFs

have more holdings but the difference has not affected their

performance which are remarkably similar. (ii) The ETF

Regional Banks which is less diversified that the broad financial

ETFs such as SPDR S&P Regional Bank (KRE) and iShare US

Regional Banks (IAT). The fundamentals for regional bank is

attractive with better prospects (iii) Global and European

Financial ETFs are available as well.

Financial ETFs

Sources: ETF Asia Analytics, Inc., Bloomberg Finance L.P., April 13, 2018

Ticker

FINANCIAL ETFs

Price ($)

AUM ($ Millions)

EXP. RATIO %

YTD RET %

XLF Financial Select Sector SPDR Fund 27.46 32,631 0.13% -1.26%

VFH Vanguard Financials ETF 69.12 8,365 0.10 -0.98

KRE SPDR S&P Regional Banking ETF 60.35 4,908 0.35 2.88

KBE SPDR S&P Bank ETF 47.47 4,028 0.35 0.59

EUFN iShares MSCI Europe Financials ETF 23.55 2,368 0.48 1.03

IYF iShares U.S. Financials ETF 117.06 2,241 0.43 -1.64

FNCL Fidelity MSCI Financials Index ETF 40.19 1,556 0.08 -0.98

FTXO First Trust Nasdaq Bank ETF 29.39 1,302 0.60 0.40

KBWB PowerShares KBW Bank Portfolio 58.87 1,147 0.35 0.06

FXO First Trust Financial AlphaDEX Fund 30.68 1,142 0.63 -1.73

Global ETF Strategy

10 Top Weekly Winners and Losers

Weekly Winners Weekly Losers

ETF Sym 1-Wk % chg ETF Sym

1-Wk % chg

SPDR S&P O&G Equip XES 11.3 IS MSCI Russia Cap ERUS -10.4

IP Crude Oil ETN OIL 10.5 ProS VIX ST Futures VIXY -9.2

HT Oil Service OIH 10.0 IP VIX S ETN VXX -9.0

FrstTr NYSEArc Biotech FBT 8.5 VV Russia RSX -8.9

United States Oil LP USO 8.3 IS MSCI Turkey Inve TUR -5.4

SPDR S&P Biotech XBI 8.1 ProS Short QQQ PSQ -2.9

US Brent Oil BNO 8.1 IS DJ US Home Const ITB -2.8

SPDR S&P O&G Equip XOP 7.9 IP VIX M ETN VXZ -2.4

FrstTr Energy Alphdx FXN 7.2 IS MSCI Brazil EWZ -2.3

FrstTr ISE Rev NatGas FCG 6.6 ProS Short Russ 2000 RWM -2.3

Source: IBD, April 13, 2018

• The top ten ETF winners for the week ended April 13th

were led by 8 energy related ETFs and two Biotech ETFS

led by SPDR S&P Oil and Gas Equipment (XES) up

11.3%, iPath Crude Oil ETN ( OIL), HT Oil Service (OIH),

United States Oil LP (USO), US Brent Oil (BNO), SPDR Oil

and Gas Exploration (XOP),First Trust Energy Alphadex

(FXN), First Trust ISE Rev Natural Gas (FCG). The two

biotech ETFs were First Trust NYSEArc Biotech (FBT) and

SPDR S&P Biotech (XBI). Energy stocks/ETFs were big

winners this week as the US WTI crude price rose

6.59% to $67.39 per barrel hitting their highest level

since 2014. The IEA said it expects global inventories to

fall below the five-year average in a month or two as

inventories are seen falling by 600.000 barrels per day

until the year end, a sign that Russia and the OPEC

cartel are nearing their production cut goals. Thanks to

a combination of better supply-demand balance and

geopolitical factors, prices for global crude price

benchmarks has been pushed to levels last seen more

than four years ago. The geopolitical worries including

President Trump’s action to attack Syria yesterday along

with France and United Kingdom is taking place along

with the supply deficit forming relative to demand

growth as forecasters seeing a continued uptrend in

energy prices. This week, investors commenced buying

into the energy story and if the situation in the Middle

East escalates further, we see further investment

opportunities in Energy ETFs. Biotech stocks/ETFs were

busy as a week of strong volume gains launched the

market into fresh uptrends. Biotech stocks like Innoviva

(INVA), Retrophin (RTRX), China’s biotech stocks like

58.com (WUBA) and Abiomed (ABMD) held their

grounds in buying range. But be cautious, Biotech

stocks can be flighty even for profitable Innoviva.

• The top ten losers for the week ended April 13th were

led by four emerging countries ETFs, the iShares MSCI

Russia (ERUS), down 10.4%, VV Russia (RSX), iShares

MSCI Turkey (TUR), iShares Brazil (EWZ), two inverse

ETFs and three volatility indices, ProShares VIX Futures

(VIXY), iPath VIX S ETN (VXX), ProShares Short

QQQ(PSQ), iPath VIX M ETN (VXZ) and ProShares Short

Russell 2000 and one Sector ETF, iShares DJ US Home

Construction (ITB). The losers came from the

geopolitical events - the sliding Russian markets as

America’s latest round of sanctions hits hard, Turkey

had its lira falling to another low against the US dollar

reflecting concerns, in part as President Erdogan’s

unveiled his investment package calling for achieving

growth at any cost despite its high stubborn inflation

rate and rising current account deficit. Brazil is going

through its political mood after the jailing of Lula da

Silva. As for the volatility indices, volatility is an

inevitable part of the financial markets and continues to

dominate risk management models and there are more

than 40 VIX- linked ETPs available for retail investors to

trade. Volatility has returned in 2018 with the CBOE VIX

index trading its long-term average of 19 - a level it did

not reach throughout 2017.

Global ETF Strategy

Performance of Selected Key ETFs

ETFs Ticker Price 4/6/2018

Weekly % Chg

YTD % Chg

STOCK MARKET ETFs

SPDR S&P 500 ETF Trust SPY 265.15 2.09 -0.24

iShares MSCI All Country World Index ETF ACWI 72.22 1.98 0.18

iShares MSCI EAFE ETF EFA 70.79 2.00 0.68

PowerShares QQQ Trust Series 1 QQQ 161.37 3.03 3.77

iShares Russell 2000 IWM 153.95 2.39 1.22

iShares MSCI Emerging Markets EEM 47.57 1.04 0.96

RISK MEASURES ETFs

Chicago Board Options Exchange SPX Volatility Index

VIX 17.41 -18.99 57.70

ProShares VIX Short-Term Futures VXX 45.30 -8.96 62.25

Chicago Board Options Exchange SKEW Index SKEW 126.00 2.95 -8.06

PowerShares S&P 500 High Beta ETF SPHB 42.58 2.53 0.48

PowerShares S&P 500 Low Volatility Portfolio SPLV 46.76 0.52 -1.56

SECTOR ETFs

Financial Sector Select SPDR Fund XLF 27.46 1.07 -1.26

Energy Select Sector SPDR Fund XLE 71.41 6.03 -0.48

Technology Sector Select SPDR Fund XLK 66.32 3.54 4.03

Consumer Discretionary Sector Select SPDR Fund XLY 101.22 0.54 2.87

Industrial Sector Select SPDR Fund XLI 73.99 1.68 -1.83

iShares Transportation Average IYT 186.45 2.19 -2.36

SPDR S&P Metals and Mining XME 35.55 4.84 -2.12

SPDR S&P Aerospace and Defense XAR 88.29 2.07 5.81

SPDR S&P Biotech XBI 89.58 8.06 5.62

iShares Nasdaq Biotechnology IBB 105.96 3.66 -0.76

PowerShares Cleantech Portfolio PZD 42.90 1.95 1.48

iShares US Preferred Stock PFF 37.17 -0.08 -0.98

iShares iBoxx High Yield Corporate Bond HYG 86.29 1.20 0.11

iShares TIPS Bond TIP 113.11 0.21 -0.57

INTERNATIONAL ETFs

iShares China Large-Cap FXI 47.60 3.55 3.10

iShares MSCI Japan EWJ 60.23 1.02 0.50

iShares MSCI india INDA 34.69 1.34 -3.83

iShares MSCI Germany EWG 32.89 2.49 -0.39

iShares MSCI United Kingdom EWU 36.28 2.86 1.28

iShares MSCI Brazil Capped EWZ 42.43 -2.28 4.89

Van Eck Vectors Russia RSX 20.38 -8.90 -3.91

COMMODITIES

SPDR Gold Shares GLD 127.45 0.84 3.07

United States Oil Fund LP USO 13.55 8.31 12.82

iPath Bloomberg Copper Sub-index Total Return JJC 34.56 0.93 -7.94

Sources: ETF Asia Analytics, Bloomberg Finance L.P. As of April 13, 2018

Global ETF Strategy

Highlights of the Week: Performance of Selected Key ETFs

• Global stock markets ended up despite a difficult week

with unsettling events on the tariffs and geopolitical

risks simmering in missile attacks in Syria amid

continuing chaos in Washington and hopeful signs that

the Trump administration is softening its trade stance

and considering rejoining the Trans Pacific Partnership

(TPP) trade pact.

• Volatility averaged at 17.41 level for the week and

moves it closer to its long-term fair value and unlikely to

return to the ultra-low values of 2017.

• All the ETF sectors were up led by biotech, metals and

mining and technology with investors optimism in the

strong and solid earnings reports.

• Developed markets (ex-USA) - Germany, United

Kingdom and Japan were all up

• In spite of signs that Eurozone growth rate was

sputtering while Japan is likely to welcome back the

US’s return to TPP.

• Emerging Markets were all up except for Russia and

Brazil confirming the EM’s resilience in turbulent times

and continuing inflow of funds from investors.

• Commodities had a strong week—all up led by the best

performing oil sector boosted by a rally in oil price, its

biggest gain since 2014 as worries over Mideast

conflicts escalated. Gold and copper were also up.

Global stock markets closed in an uptrend after a choppy

trading week as the Dow Jones Industrial rose 1.79%, S&P

500 1.99% and the Nasdaq 2.77%. Minutes released from

the Federal Reserve March policy (FOMC) meeting suggested

the Fed bankers expect inflation and growth to strengthen

and rate hikes to continue. Facebook rose 4.7% as Mark

Zuckerberg got through largely unscathed in two days of

congressional hearings following revelations that Cambridge

Analytica had wrongfully accessed data from 87 million

Facebook users. Investors focused on the first stream of

earnings report from bank stocks led by JP Morgan (JPM),

Citicorp (C) and Wells Fargo (WFC) which all topped first

quarter earnings estimates but shares reversed lower as

investors worried that the tax cuts may not boost lending.

Energy stocks had their biggest weeks in months. Across the

Atlantic, the Europe Stoxx 50 rallied, up 1.17% led by

Norway and German markets. Note a growing trend on the

proportion of revenues generated domestically has fallen by

less than half in the past five years on the European

companies covered most widely used in the European indices.

Across the Pacific, Asian shares were up as the US toned

down threats of a trade war. China Shanghai Index was up

0.895% as well as Japan’s Nikkei 225, up 0.98%. The other

world indices, the MSCI World, MSCI EFA and MSCI

Emerging Markets were all up. The number of companies

posting Q1 results will bulge in the next few weeks as well as

profit estimates. Some of the questions raised these days are;

what’s next for the oil price? Will the roller coaster market

ride continue with the rising rates and threats of wars, both

trade and real and are prospects of global growth slowing

down? What about surprises in earnings and guidance or

policy missteps? Will the nine-year old bull market meet its

end? Let us review the key performance indices for some

insights.

Global stock market ETF indices were all up for the week led

by PowerShares QQQ Trust (QQQ), iShares Russell 2000

(IWM) and SPDR S&P 500 ETF Trust (SPY). Also up were the

iShares MSCI EAFE Trust (EFA), iShares MSCI All Country

Index (EFA) and iShares MSCI Emerging Markets (EMM).

Emerging Markets have started to perform over the last year

after essentially a lost decade. Returns going forward are

expected to be higher than other asset classes on a long-term

basis. We expect emerging markets ETFs to be the best

beneficiaries of higher commodity prices and global growth

late in the business cycle. Saudi Arabia, Vietnam and Malaysia

were among the top foreign stock ETFs during the past

month. The Frontier Markets also showed strength. The tech

stock ETFs led the sectors in the past month while the stock

market leadership shifted as market volatility took its toll. We

have favored the sector as earnings have outpaced the S&P

500 in recent years and we continue to see upside in 2018 as

tech earnings such as hardware and equipment providers are

in an upswing in company spending. Sound economy and tax

reforms are driving strong earnings as the biggest growth

driver so we would favor having the SPDR S&P 500 and

PowerShares QQQ in an ETF portfolio.

Risk Appetite Measures as measured by the CBOE Volatility

Index (VIX), nicknamed the “fear gauge” was down 18.89%

to the 17.41 level. The ProShares VIX Short Term Futures

(VXX) was also down while Chicago Board Skew Index

(SKEW), PowerShares S&P 500 high Beta ETF (SPHB) and

Power Shares S&P 500 Low Vol (SPLV) were all up. Various

interpretations have been presented about the VIX’s behavior

like the eerie calm in 2017 when the it sank to its lowest level

of below 10 reflecting the investors’ complacency in the

markets. Volatility per se, whether it is related to weather,

market or portfolio returns is simply a benign statistical

measurement that tells nothing about risk until it is

accompanied by consequences and its measurement is

Global ETF Strategy

useless until we describe the probability in terms of

‘probability of what?” In sum, the traditional narrow

definition of market or portfolio risks based on volatility

encourages asset owners to apply a universal risk standard.

The year 2018 is drastically different to 2017 as volatility has

returned and is here to stay as it has consistently traded near

its long-term average of 19 with the headwinds from

geopolitical and economic risks.

ETF Sector Investing were all up this week led by Biotechs, up

8.06%, metals and mining and technology sectors. US

companies are expected to report earnings growth of 17.3%

for the first quarter of 2018, with the Trump’s corporate tax

rate which should deliver the biggest quarterly increase in

seven years. The first string of earnings report was the

banking group which reported earnings above expectations

but concerns on the progress of de-regulation delivered

lackluster result. Thus far, 2018 has been the story of rising

oil prices but lagging energy stocks but it looks like the sector

is making a comeback as the top earning sector in the S&P

500 with a 6% gain, the highest one gain week since

December 2016 led by the Energy Select SPDR Sector (XLE) as

well as the PowerShares Clean Tech (PZD). The other

expected top earnings gainers were the materials,

information technology and financials reflected in their ETFs:

Technology Sector Select SPDR (XLK), Financial Sector Select

SPDR (XLF), SPDR S&P Metals and Mining (XME). The Biotechs

led the group with the momentum and positive earnings

from the biotech companies. Thus, the sector ETFs will be

trading on fundamentals with lower prices but earnings

estimates are changed for the better. Stocks in the S&P 500

index are trading at 16.4 times forward earnings compared to

17.4 times last March. Wall Street analysts forecasts broad

based gains in earnings in all of the 11 sectors of the S&P

500. Thus earnings season is the impetus for soothing market

uncertainties and the fundamentals for valuations and

earnings growth. We stick to our favored sectors of financials,

technology, health care, commodities including oil and

mining.

Developed Markets ETFS (ex US) were all up this week.

iShares MSCI Germany (EWZ) was up 2.49% for the week as

Germany’s economy steams ahead. The country has a record

trade surplus, record budget surplus and record low

unemployment while business confidence remains elevated at

the close of the first quarter of 2018. However, data on

exports recorded its sharpest contraction of 3.2% in two and

a half years in February. Germany is in the process of

transformation into a more plural society with huge influx of

refugees in 2015-2016 while reports point to the increasing

fragmentation of the German electorate. Germany’s

vulnerability to trade war disruption makes it a natural broker

in these times of tariff wars. Its economic Minister persuaded

the White House to suspend the planned steel and aluminum

tariff duties on the EU. iShares MSCI United Kingdom was up

for the week and still in a decent economic shape and

performed better than anticipated despite the Brexit

uncertainty. Some latest good news are the accelerating

productivity at annual rate of 3.4%, the fastest growth since

2005, improving capital spending as well as falling inflation

and total investment as a percentage of GDP is above its

average since the crisis. Its expansion relative to the G7 is the

slowest as private consumption slows and negative

contribution from external growth. Reliable trade models

predict long term losses from Brexit of up to 10% of its GDP.

Investment could boost productivity enough to outweigh

impact of lost trade and its government investment as a share

of GDP is reaching its highest sustained level in 40 years. Also

its loose monetary policy and better export growth with the

weaker pound may cushion the slowdown. Turning to Japan,

the iShares MSCI Japan (EWJ) was also up for the week as it is

likely to welcome the return of US to the TPP trade pact

although the time scale and route is still unclear. Japan’s

Bank of Japan (BOJ) is supporting on-going monetary

accommodation until they see a sustained inflation rise to

1%. Japan faces a turning point as wages and household

spending shrank in February while its current account surplus

shrank to JPY 2.08 trillion in February due to smaller trade

surplus and stronger yen. Japan’s machinery orders, however

were up in February by 2.1%, its highest level in over two

years. It is technology that is leading Japan in its economic

revival and 1Q2018 results are better than expected. Positives

in the outlook includes the improving global growth, solid

earnings and domestic investor buying. We remain positive

on Japanese ETFs.

Emerging Market ETFs were mixed this week with Russia and

Brazil as the underperformers. iShares China Large Capped

(FXI) was up 3.55% as trade war talks between US and China

waned with China maintaining a balanced stance with

conciliatory remarks from President XI Jinping’s recent speech

before the Boao Forum for Asia attempting to reduce trade

tensions with America by offering tariff reductions on car

imports and reaffirmed the country’s commitment to further

liberalize its manufacturing sector by easing joint ventures

requirements and opening up its financial markets more fully

to foreigners. However, there were no new details about

when or how they would be implemented. The Chinese

economy started on strong footing during the first quarter of

2018 with robust infrastructure spending, inflation

moderating, industrial production up, as well as gains in

investments and retail sales—all the data are aligned with the

growth target of 6.5% this year. iShares MSCI India (INDA) is

up 1.345 for the week as the Sensex nifty 50 index rose for

the 7th day as risk appetite returns. India’s Central Bank

forecasts a GDP growth rate of 7.4% ending March, thus

Global ETF Strategy

exceeding China’s projected 6.5% growth rate target for the

third year, supported by forex reserves hitting a new high,

business conditions stabilizing in March while services PMI

also expands, trade deficit narrows and price pressures

softening. Prime Minister Modi still is faced with

implementing his reform agenda directed at the public banks

after the scandals and resolving the cases of Binani Cement

and large industrial group of Essar Steel under India’s new

bankruptcy code. It will bolster the confidence in the new law

and clean up India’s business credit framework if these cases

are resolved. Brazil, the largest economy in Latin America

continues to sort out its political outlook as former President

Lula da Silva began serving his 12 year term in prison. iShares

MSCI Brazil Capped declined 2.28% for the week. Notable

data for the week is the rebound of PMI in March while

services now account for more than 65 % of its total

economic activity. US trade tariffs could help Brazil’s push to

dominate the global farm export market and further China’s

goals of building closer ties with Latin America. Brazil is

already China’s largest trading partner accounting for 47% of

its soybean exports ploughing nearly $21 billion to Brazil. The

Brazilian beef industry could be another beneficiary. With its

extensive deposits of mineral resources and commodities and

its participation in the TPP pact helps Brazil’s growth to be

globally competitive and represents an attractive EM market.

Finally, turning to Russia, the BRIC group’s worst performer

this week, VanEck Vectors Russia (RSX) is down 8.9% this

week as Russian stocks, bonds and currency suffered their

worst sell off in four years as investors fear the impact on

growth from new round of sanctions from the US and the

geopolitical risk from Syria despite the economy’s relative

strength. There is ample reason for concern as the US

transaction bans 24 Russian oligarchs, government officials

and 14 companies. This time around the conditions are better

than when sanctions took place in 2014 over Crimea. Now,

the oil prices are reaching new highs since 2014 and less

volatile for a commodity revenue dependent economy like

Russia. Also, Russian economy is in a better shape with its

return to growth of 1.7% according to the World Bank

forecast. While banks and short-term debt has fallen from

more than 40 % to 20% and the ruble is freely floating and

can withstand better shocks. The rising oil prices, healthy

labor market and manufacturing activity during the first

quarter of 2018 as consumer confidence improves. The

question now is whether the Russian central bank could be

forced to hold off cuts in interest rates in its next meeting in

two weeks. Last week, Russia was the best performing

emerging market in the MSCI Emerging Market Index as

investors ignored the risks of sanctions. Now the challenging

issue for investors is to weight the risk of further sanctions

and how Russia will react to pressures and assess how badly

its economy will be hurt. EM Markets are supported by

improving corporate fundamentals and economic growth,

reforms and reasonable valuations while risks includes trade

tensions and domestic elections. We favor EM markets in Asia

like China and India.

Commodities were all up for the week led by United States

Oil Fund (USO), up 8.31% for the week and YTD gain of

12.82%, with a reduction in global inventories and

rebalancing of supply demand dynamics supporting higher oil

prices. Gold finds support from mounting political tension as

its gold price of $1,346.20 per ounce hits its highest price

since January. SPDR Gold Shares (GLD) rose 0.84% to 127.45

while iPath Bloomberg Copper sub index total return (JJC)

was also up as the demand for copper remains attractive.

With raw materials rallying on escalating political tensions

across the globe and economic growth remaining strong, the

case for owning commodities over the next twelve months is

strong.

Bottom Line: The year 2017 will go down in stock market

history for its lowest volatility in the stock market history as

reflected in the CBOE Volatility Index - VIX for short. It fell as

to its lowest level of 8.56 which reflected the tranquil market

backdrop. The VIX doesn’t measure actual realized volatility. It

measures what is known as implied volatility which is

calculated based in the price of near term S&P 500 Index

options. Volatility is back in 2018 in the wake of market

turmoil last February 2018 with the collapse of two exotic

products and market uncertainties. Since ETFs were

introduced 25 years ago in 1993, it has transformed asset

management and today represents the fastest growing

investment vehicles. ETFs offer many benefits to investors

including intraday trading flexibility, tax efficiency and

potentially lower costs, but one of their most important ETF

features - their liquidity is one of the most widely

misunderstood. Many investors believe that individual stocks

and ETFs have similar liquidity traits but ETFs are

fundamentally different. Look through to an ETFs underlying

securities to assess overall liquidity. Total ETF liquidity is made

up of both ETF shares traded in the secondary market and

shares that can be created and redeemed in the primary

market. As global stock markets rallied over the past two

years, leveraged ETFs which use derivatives to juice up the

returns of the index they are tracking by up to three times

have had robust growth. At the end of 2017 there were 883

leveraged and inverse ETPs that seek to do the opposite of

the index with assets of more than $80 billion. The collapse

of the two VIX linked ETPs last February is intensifying the

regulatory scrutiny of the entire ETF ecosystem. The products

have long been controversial, with critics pointing out that

they are complicated instruments suitable for sophisticated

traders rather than retail investors who often use them. In

evaluating liquidity in the ETF market, it is important to look

beyond the trading volume and on screens of liquidity which

Global ETF Strategy

may be misleading. An important advice for trading ETFs:

Contact capital market desks at ETF issuers and or a broker

dealer prior to executing large trades as it has the tools to

help assess true liquidity and assist with efficient trade

execution. Most ETF providers have capital market desks

whose role is to work with everyone in the ETF marketplace—

including portfolio managers, authorized participants (APs),

market makers, and stock exchanges to encourage and

promote an efficient ETF marketplace.

THE WORLD IS YOUR OYSTER. Reach out to the DBS Vickers

Securities Representative for advice and consultation.

Weekly U.S. ETF Flows Summary

Highlights of the Week

• Geopolitical risk has resurfaced over the past week. But

volatility has remained subdued with the VIX index falling

18.99% and market moves have generally been muted.

Despite the heightened uncertainty from a weakening

growth cycle and the trade tensions, risk appetite stayed

positive. For the week, the Dow Jones Industrial Average

gained 1.79%, the S&P 500 rose 1.99% and the Nasdaq

Composite advanced 2.77%, thanks to a rebound in tech

stocks and a big jump in energy shares.

• ETF inflows rebounded as investors tiptoed back into U.S.-

listed ETFs. U.S.-listed ETFs posted $13,161.72 million net

inflows, reversing the previous week’s net outflows of

$3,048.85 million. Equity ETFs gained $7,857.28 million

inflows after $9,579.21 million of net outflows in the

previous week, while fixed income ETFs had net inflows of

$4,390.04 million, compared to the previous week’s

$5,374.05 million of net inflows. The U.S. ETF

marketplace closed at $3,474.33 billion in total AUM.

• U.S. equity ETFs garnered weekly inflows of $6,852.14

million, after registering $9,734.50 million of redemptions

the previous week.

• International equity ETFs posted weekly net inflows of

$1,005.14 million, following $155.29 million of net

inflows during the previous week.

• Meanwhile, U.S. fixed income ETFs saw $4,035.44 million

of net inflows, down slightly from the previous week’s

$4,916.16 million of net inflows.

• International fixed income ETFs showed another weekly

net inflows of $354.60 million, compared to the previous

week’s $457.89 million of net inflows .

• Commodity ETFs continued to post net inflows of

$750.10 million. But leveraged ETFs had weekly outflows

of $171.32 million, while inverse ETFs saw net inflows of

$141.65 million.

• Asia Pacific ETFs listed in the U.S. attracted $8.85 million

of net new assets. Broad Asia Pacific ETFs had $81.49

million of net inflows, while Asia Pacific emerging markets

ETFs faced $408.61 million of redemptions.

During the week to April 12th, equity ETFs regained the

confidence of investors, taking in $7,857.28 million. This

followed three consecutive weeks of net outflows totaling

$49,643.00 million. Investors also returned to the corporate

bond market the past week, albeit carefully, with high yield

bond ETFs garnering modest inflows for the first time since

early January and investment grade ETFs taking in the most

since last summer.

• Among individual ETFs, the broad SPDR S&P 500 ETF

Trust (SPY) posted the largest inflows with $4,265.80

million. The iShares Russell 2000 ETF (IWM) took in

$677.10 million of net new assets, while the Vanguard

Total Stock Market ETF (VTI) and the SPDR Dow Jones

Industrial Average ETF Trust (DIA) registered net inflows

of $438.52 million and $424.25 million each over the

same period.

• Meanwhile, emerging markets ETFs continued to attract

inflows the past week. The iShares Core MSCI Emerging

Markets ETF (IEMG) garnered $413.59 million of net

inflows, bringing its YTD inflows to $7,029.08 million.

Interestingly, the PowerShares S&P Emerging Markets

Low Volatility Portfolio (EELV) saw weekly inflows of

$423.84 million, or 149.44% of its AUM, while a nearly

equivalent amount flowed out of the PowerShares S&P

Emerging Markets Momentum Portfolio (EEMO),

suggesting a rotation trade from one emerging markets

ETF to the other.

• In the fixed income space, the iShares iBoxx $ Investment

Grade Corporate Bond ETF (LQD) gained $817.60 million

of weekly inflows. The iShares Short Treasury Bond ETF

(SHV) and the iShares iBoxx $ High Yield Corporate Bond

ETF (HYG) also garnered net inflows of $628.49, or

5.13% of its AUM, and $520.36 million, respectively.

• Another notable asset gainer was the safe-haven SPDR

Gold Trust (GLD). GLD showed $507.90 million of net

inflows the past week. In the past week, gold was up

$12.50, or 0.94%, at $1,348.60 an ounce after hitting

an intraday high of $1,368.30 on Wednesday.

Global ETF Strategy

• On the other end of the spectrum, non-U.S. equity ETF,

the iShares MSCI EAFE ETF (EFA), led the weekly

outflows with $632.74 million of redemptions. The

PowerShares S&P Emerging Markets Momentum

Portfolio (EEMO) had $428.95 million of redemptions,

representing 92.83% of its AUM. The iShares MSCI

Eurozone ETF (EZU) faced redemptions of $333.95

million.

• In terms of U.S. equity ETFs, the iShares Core S&P 500

ETF (IVV) led with $552.93 million of net outflows, while

the Industrial Select Sector SPDR Fund (XLI) and the

Technology Select Sector SPDR Fund (XLK) showed net

outflows of $312.60 million and $189.62 million,

respectively.

• A group of fixed income ETFs also suffered weekly net

outflows the past week. The Vanguard Short-Term Bond

ETF (BSV) and the Vanguard Intermediate-Term

Corporate Bond ETF(VCIT) recorded redemptions of

$289.84 million and $245.10 million each. The iShares JP

Morgan USD Emerging Markets Bond ETF (EMB) showed

$224.85 million of net outflows, while the SPDR

Bloomberg Barclays Short Term High Yield Bond ETF

(SJNK) faced net outflows of $188.59 million,

representing 4.74% of its AUM.

• In the week to April 12th, Asia Pacific ETFs listed in the

U.S. recorded weekly net inflows of $8.85 million

following the previous week’s net inflows of $83.84

million, which brought their YTD net inflows to

$1,083.18 million. Broad Asia Pacific ETFs took in $81.49

million of inflows. Asia Pacific emerging markets ETFs,

however, continued to bleed assets with weekly net

outflows of $408.61 million.

• Japan led weekly inflows with $226.87 million in the

past week. China and Singapore followed with net

inflows of $155.76 million and $78.59 million each.

Vietnam and Malaysia also saw net inflows of $12.89

million and $10.64 million, respectively. Thailand showed

net inflows of $4.84 million.

• Meanwhile, India registered the largest net outflows with

$126.31 million of redemptions. Australia also showed

net outflows of $27.33 million.

• Among individual ETFs, the iShares MSCI Japan ETF (EWJ)

garnered the largest weekly inflows with $188.86

million, while the iShares MSCI Japan Small Cap ETF

(SCJ) had net inflows of $121.58 million, or 32.93% of

its AUM.

• The iShares MSCI China ETF (MCHI) had $133.74 million

of net inflows, and the Deutsche X-trackers Harvest CSI

300 China A-Shares Fund (ASHR) recorded net inflows of

$24.93 million, representing 5.05% of its AUM.

• The iShares Asia 50 ETF (AIA) garnered $103.32 million

of net inflows, or 10.78% of its AUM, while the iShares

MSCI Singapore ETF (EWS) and the VanEck Vectors

Vietnam ETF (VNM) attracted net inflows of $78.59

million, or 11.07% of its AUM, and $12.89 million each.

The iShares MSCI Malaysia ETF (EWM) and the iShares

MSCI Thailand Capped ETF (THD) also saw weekly

inflows of $10.64 million and $4.84 million, respectively.

• At the other side, the iShares India 50 ETF (INDY) faced

the largest weekly redemptions of $121.98 million, or

10.67% of its AUM. The WisdomTree Japan Hedged

Equity Fund (DXJ) and the iShares MSCI Australia ETF

(EWA) saw redemptions of $87.07 million and $31.17

million each, while the KraneShares CSI China Internet

ETF (KWEB) and the Vanguard FTSE Pacific ETF (VPL) had

net outflows of $24.47 million and $21.83 million,

respectively.

• As of the week ended April 12th, 2018, the U.S. ETF

market had 2,187 ETPs from 129 fund sponsors and 150

index providers listed on 4 exchanges. The number of

ETFs has increased 3.2% YTD with 90 new funds

launched and 23 delisted. Total ETF assets stood at

$3,474.33 billion, which have risen by 1.60% YTD, an

increase of $55.06 billion. Net inflows were $71.20

billion. The average daily trading volume has increased

by 24.30% to $92.96 billion as compared to the same

period last year.

Global ETF Strategy

Weekly Flows of Selected Asia-Focused ETFs Listed in U.S.*

Ticker Name Net Flows ($mm)

AUM ($mm)

%AUM Change

%Weekly Perform

%Short Interest

EWJ iShares MSCI Japan ETF 188.86 21,238.54 0.90% -0.56% 4.10%

MCHI iShares MSCI China ETF 133.74 3,594.56 3.86% 1.87% N.A.

SCJ iShares MSCI Japan Small Cap ETF 121.58 490.80 32.93% -1.21% 1.30%

AIA iShares Asia 50 ETF 103.32 1,062.10 10.78% 1.14% N.A.

EWS iShares MSCI Singapore ETF 78.59 788.38 11.07% 2.13% 1.70%

ASHR Deutsche X-trackers Harvest CSI 300 China A-Shares Fund

24.93 518.34 5.05% 0.61% 21.90%

VNM VanEck Vectors Vietnam ETF 12.89 458.19 2.89% -2.61% 3.80%

GMF SPDR S&P Emerging Asia Pacific ETF 10.69 523.18 2.09% 1.14% 2.20%

EWM iShares MSCI Malaysia ETF 10.64 705.38 1.53% 1.91% 3.80%

THD iShares MSCI Thailand Capped ETF 4.84 512.59 0.95% 1.91% 6.60%

VPL Vanguard FTSE Pacific ETF -21.83 4,816.65 -0.45% 0.05% 0.00%

KWEB KraneShares CSI China Internet ETF -24.47 1,576.18 -1.53% 0.76% 3.90%

EWA iShares MSCI Australia ETF -31.17 1,510.17 -2.02% 1.45% 8.10%

DXJ WisdomTree Japan Hedged Equity Fund -87.07 6,561.32 -1.31% -0.50% 3.40%

INDY iShares India 50 ETF -121.98 1,021.66 -10.67% 0.92% N.A.

Source: ETFAA, FactSet via ETF.com, XTF.com, ETFdb.com * Includes ETFs with AUM>$60 Million as of the week ended April 12th, 2018

Flows of U.S.-Listed Asia Pacific ETFs by Country* (Net Flows (US$mm)

Source: ETFAA, FactSet via ETF.com, XTF.com * As of the week ended April 12, 2018

Global ETF Strategy

Top 10 Weekly Inflows (All ETFs) *


AUM ($mm)

%AUM Change

%Weekly Perform

%Short Interest

SPY SPDR S&P 500 ETF Trust 4,265.80 252,737.70

1.72% 0.11% 20.30%

LQD iShares iBoxx $ Investment Grade Corporate Bond ETF 817.60 33,095.55 2.53% 0.17% 6.70%

IWM iShares Russell 2000 ETF 677.10 42,289.03 1.63% 0.87% 28.40%

SHV iShares Short Treasury Bond ETF 628.49 12,879.42 5.13% 0.02% N.A.

HYG iShares iBoxx $ High Yield Corporate Bond ETF 520.36 15,323.03 3.52% 0.91% 29.80%

GLD SPDR Gold Trust 507.90 37,599.30 1.37% 0.65% 2.90%

VTI Vanguard Total Stock Market ETF 438.52 93,127.58 0.47% 0.17% 0.80%

DIA SPDR Dow Jones Industrial Average ETF Trust 424.25 21,082.86 2.05% -0.04% 9.30%

EELV PowerShares S&P Emerging Markets Low Volatility Portfolio 423.84 707.47 149.43% 0.69% 0.10%

IEMG iShares Core MSCI Emerging Markets ETF 413.59 50,494.92 0.83% 0.17% 1.40%

Source: ETFAA, FactSet via ETF.com, XTF.com * For the week ended April 12th, 2018

Top 10 Weekly Outflows (All ETFs)*


AUM ($mm)

%AUM Change

%Weekly Perform

%Short Interest

EFA iShares MSCI EAFE ETF -632.74 78,318.29 -0.80% 1.29% 2.40%

IVV iShares Core S&P 500 ETF -552.93 140,269.62

-0.39% 0.12% 0.40%

EEMO PowerShares S&P Emerging Markets Momentum Portfolio -428.95 33.12 -92.83% 0.54% 1.40%

EZU iShares MSCI Eurozone ETF -333.95 13,965.66 -2.34% 1.63% 1.60%

XLI Industrial Select Sector SPDR Fund -312.60 12,769.31 -2.39% -0.90% 21.50%

BSV Vanguard Short-Term Bond ETF -289.84 24,082.70 -1.19% 0.06% 0.70%

VCIT Vanguard Intermediate-Term Corporate Bond ETF -245.10 18,301.03 -1.32% 0.19% N.A.

EMB iShares JP Morgan USD Emerging Markets Bond ETF -224.85 11,848.35 -1.86% -0.07% N.A.

XLK Technology Select Sector SPDR Fund -189.62 20,141.28 -0.93% 1.34% 7.50%

SJNK SPDR Bloomberg Barclays Short Term High Yield Bond ETF -188.59 3,789.04 -4.74% 0.73% 0.40%


Weekly Flows By Asset Class*

Asset Class Net Flows ($mm) AUM ($mm) % of AUM

U.S. Equity 6,852.14 1,895,079.39 0.36%

International Equity 1,005.14 846,414.43 0.12%

U.S. Fixed Income 4,035.44 533,128.01 0.76%

International Fixed Income 354.60 64,055.56 0.55%

Commodities 750.10 71,508.70 1.05%

Currency 49.20 1,428.08 3.45%

Leveraged -171.32 36,007.07 -0.48%

Inverse 141.65 13,330.57 1.06%

Asset Allocation 254.74 9,135.02 2.79%

Alternatives -109.97 4,247.02 -2.59%

Total: 13,161.72 3,474,334.74 0.38%

U.S. Equity 6,852.14 1,895,079.39 0.36%

International Equity 1,005.14 846,414.43 0.12%

U.S. Fixed Income 4,035.44 533,128.01 0.76%


Global ETF Strategy

Weekly ETF Flows by Asset Class

Source: ETFAA, FactSet via ETF.com, XTF.com

* As of the week ended April 12th, 2018

Cumulative Weekly ETF Flows YTD by Asset Class*

Source: ETFAA, ETF.com, XTF.com, ETFdb.com

* As of the week ended April 12th, 2018

Global ETF Strategy

Completed Date: 16 Apr 2018 10:18:53 (SGT)

Dissemination Date: 16 Apr 2018 11:53:03 (SGT)

Sources for all charts and tables are DBS Bank unless otherwise specified

GENERAL DISCLOSURE/DISCLAIMER

This report is prepared by DBS Bank. This report is solely intended for the clients of DBS Bank Ltd, its respective connected and associated

corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii)

redistributed without the prior written consent of DBS Bank.

The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS

Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively,

the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other

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warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without

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positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and

other banking services for these companies.

Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can

be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments.

The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may

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update the information in this report.

This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned

schedule or frequency for updating research publication relating to any issuer.

The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and

assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on

which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual

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(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and

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assessments stated therein.

Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets.

Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies)

mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the

commodity referred to in this report.

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offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage

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ANALYST CERTIFICATION

The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies

and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her

compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s)

primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate1 does not serve as an officer of the

issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real

estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the

management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or his

associate does not have financial interests2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has procedures in

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research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the DBS

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proprietary positions in HT Oil Service, United States Oil LP, SPDR S&P O&G Equip, SPDR S&P 500 ETF Trust, SPDR S&P Metals and Mining,

iShares Nasdaq Biotechnology, iShares China Large-Cap, SPDR Gold Shares, recommended in this report as of 13 Apr 2018.

2. Neither DBS Bank Ltd, DBS HK nor DBSV HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research

Report.

Compensation for investment banking services:

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should contact DBSVUSA exclusively.

Disclosure of previous investment recommendation produced

4. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other

investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12

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1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst.

2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.

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Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

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United Arab Emirates

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