The global stock market saw a tumultuous start to 2016, thanks mainly to China-led woes and steeply falling oil prices. Global equities saw the worst start to a year in 16 years, while the world's 400 wealthiest people saw nearly $194 billion going astray last week. The first week of 2016 was the worst week for the U.S. and Asian stocks in last four years.
Hard landing fears in the Chinese economy took the upper hand and regulated investing in the week. With the situation still being wobbly, some investors might consider a look at the best- and worst-performing ETFs of the first week of 2016 a prerequisite. For them, below are the top and flop ETFs of last week (as per xtf.com) that can give cues to future investing.
C-Tracks on Citi Volatility Index ETN (NYSEARCA:CVOL) - Up 31.1%
Volatility products gained the most in the week, as these tend to outperform when markets are falling or fear levels over the future are high, both of which were the flavors of the first week of the new year. The China-induced plunge, persistent oil worries and uncertainty regarding global growth were behind the uptrend in volatility. As such, CVOL, linked to the Citi Volatility index Total Return, surged about 31.1% last week.
Global X Gold Explorers ETF (NYSEARCA:GLDX) - Up 10.4%
Gold veered higher last week on a flight to safety. Wreckage in the global stock markets spurred the appeal for safe-haven assets like gold. Along with the underlying metal, gold mining ETFS also put up great gains, as these often trade as a leveraged play on gold. As a result, GLDX, which looks to track the performance of the companies engaged in the exploration of gold, advanced over 10% last week.
However, investors should note that these are winning trends when the markets stabilize. Also, strong December U.S. job data should strengthen the greenback and in turn lower the value of the metal.
iPath DJ UBS Platinum Trust Sub-Index ETN (NYSEARCA:PGM) - Up 9.8%
Platinum is another specious metal which gained last week. Safe-haven demand as well as robust U.S. auto sales boosted this metal. Notably, the automotive industry is a big driver of usage in the platinum market. The metal is used specifically in catalytic converters to manage vehicle emissions. With a surge in the auto industry, demand for this presently beleaguered metal should rev up to some extent. As a result, PGM was up 9.8% last week.
ETRACS ISE Exclusively Homebuilders ETN due March 13, 2045 (NYSEARCA:HOMX) - Down 28.4%
This sector is presently steady, but Fed policy tightening, the earnings miss at KB Home (NYSE:KBH), and the analyst downgrade suffered by D.R. Horton (NYSE:DHI) may have spelled dark times for the housing stocks, which catapulted a double-digit decline in the housing ETN HOMX.
Market Vectors ChinaAMC SME-ChiNext ETF (NYSEARCA:CNXT) - Down 19.6%
Grave economic releases out of China and heightened volatility in its stock market sent most China equities ETFs in the red, with this A-Shares ETF leading the decline. Hints of further shrinkage in the country's manufacturing sector in December were held responsible for the bloodbath in the market. Additionally, China's central bank guided the yuan to a five-year low in off-shore trading in the middle of the week, which raised expectations of further weakness in the economy.
There was a trading halt on the key Chinese bourses, with the indexes diving 7% to start the new year. The decline was the worst single-day performance since the 8.5% decline on August 24, 2015, which was the root of the global market rout last summer.
BioShares Biotechnology Clinical Trials ETF (NASDAQ:BBC) - Down 18%
This surging sector was off to a choppy start in 2016. The Nasdaq Biotechnology Index lost about 8.7% in the first week of the new year. Though global sell-offs should not have any direct impact on the underperformance of this high-potential sector, the general escape from the high-growth investing areas might have soured biotech investing.
Plus, a few biotech secondary equity offerings priced at sharp discounts last week sparked off speculation that the strong biotech momentum is about to end, per The Wall Street Journal. All these dragged down BBC by 18% - the worst loser in the biotech space.