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Industrial metals’ stocks have been the star performers this month on signs of rising demand in China and a weak dollar. China is growing faster than expected with its GDP expanding 6.9% in the second quarter. This was well above analysts' expectations of a 6.8% expansion. With this, we can say that China is on track to comfortably to meet it’s this year growth target of 6.5% (read: China Q2 GDP Beats Expectations: ETFs in Focus).
Robust growth came on the heels of strong industrial production, recovering exports, low inventory, government infrastructure spending spree, robust retail sales and a strengthening housing market. This has infused huge confidence in the world’s second-largest economy thereby pushing the metals higher. Meanwhile, the U.S. dollar slumped to 13-month low against a basket of currencies on the Fed’s dovish stance and soft data on inflation and consumer spending. A weak dollar has made dollar-denominated assets cheap for foreign investors and has thus raised the appeal for metals.
In particular, copper producers have been leading the way higher in the anticipation of reduced imports of refined copper from the world’s top metal user. This is especially true as China is seeking to curb some imports of machinery waste and other products for the purpose of extracting metals scrap from year-end 2018. This would disrupt the supply of the red metal while push up demand for imported refined copper, leading to higher prices. Notably, about half of the world’s copper demand comes from China.
As a result, Global X Copper Miners ETF (COPX - Free Report) topped the list of the best performing ETFs of July, delivering solid returns of about 17.1% (see: all the Materials ETFs here).
Let’s take a closer look at the fundamentals of COPX:
COPX in Focus
This product provides global access to a broad range of copper mining companies by tracking the Solactive Global Copper Miners Total Return Index. Holding 28 stocks in its basket, the fund is slightly concentrated on the top firm at 7.02% of the assets while the other firms hold less than 5.3% share. Canadian firms take the largest share at 26%, while China, United Kingdom and Mexico also receive a double-digit exposure each. The product has managed $39.4 million in AUM while charges 65 bps in fees per year. It trades in a light volume of 48,000 shares a day on average.
Though most of the stocks in the fund’s portfolio delivered strong returns, a few were the real stars, having gained more than 20%. Below we have highlighted the best-performing stocks in the ETF with their respective positions in the fund’s basket:
Best Performing Stocks of COPX
Kaz Minerals PLC : The stock has been flying higher, having surged over 43.3% this month. The stock has seen positive estimate revision of a couple of cents for the current year over the past one month but has a Zacks Rank #4 (Sell) with a VGM Style Score (V stands for Value, G for Growth and M for Momentum) of C. The Industry Zacks Rank in the bottom 32% is also disappointing. Kaz Minerals occupies the top position in the fund’s basket with 7% of total assets.
HudBay Minerals Inc. (HBM - Free Report) : This stock takes the fourth spot in the fund’s basket with 5% allocation. It has also delivered incredible returns of 29.5% this month. The stock has seen negative earnings estimate revision of a couple of cents for this fiscal year over the past one month but has a whopping earnings growth rate of 216.67%. HudBay Minerals has a Zacks Rank #5 (Strong Sell) with a VGM Style Score of A and a dismal Zacks Industry Rank in the bottom 7%.
Teck Resources Ltd (TECK - Free Report) : This stock takes the fifteenth position in the fund’s basket with 4% of assets. It has gained 22.6% this month and has seen negative earnings estimate revision of 10 cents over the past one month for this year. However, its earnings are expected to grow a massive 119.93%. TECK currently has a Zacks Rank #3 (Hold) with a VGM Style Score of A but a dismal Zacks Industry Rank in the bottom 7% (read: Is Surprise in the Cards for Materials ETFs in Q2 Earnings?).
Freeport-McMoran Inc. (FCX - Free Report) : The stock has risen 20.7% and carries a Zacks Rank #3 with a VGM Style Score of A. Though the stock has seen negative earnings estimate revision of three cents for this year over the past one month, its earnings are expected to grow 310.63%. However, Freeport-McMoran has an ugly Zacks Industry Rank in the bottom 32%. The stock is the sixth firm and accounts for 4.8% share in FCX.
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5 Best Stocks of the July ETF Winner
Industrial metals’ stocks have been the star performers this month on signs of rising demand in China and a weak dollar. China is growing faster than expected with its GDP expanding 6.9% in the second quarter. This was well above analysts' expectations of a 6.8% expansion. With this, we can say that China is on track to comfortably to meet it’s this year growth target of 6.5% (read: China Q2 GDP Beats Expectations: ETFs in Focus).
Robust growth came on the heels of strong industrial production, recovering exports, low inventory, government infrastructure spending spree, robust retail sales and a strengthening housing market. This has infused huge confidence in the world’s second-largest economy thereby pushing the metals higher. Meanwhile, the U.S. dollar slumped to 13-month low against a basket of currencies on the Fed’s dovish stance and soft data on inflation and consumer spending. A weak dollar has made dollar-denominated assets cheap for foreign investors and has thus raised the appeal for metals.
In particular, copper producers have been leading the way higher in the anticipation of reduced imports of refined copper from the world’s top metal user. This is especially true as China is seeking to curb some imports of machinery waste and other products for the purpose of extracting metals scrap from year-end 2018. This would disrupt the supply of the red metal while push up demand for imported refined copper, leading to higher prices. Notably, about half of the world’s copper demand comes from China.
As a result, Global X Copper Miners ETF (COPX - Free Report) topped the list of the best performing ETFs of July, delivering solid returns of about 17.1% (see: all the Materials ETFs here).
Let’s take a closer look at the fundamentals of COPX:
COPX in Focus
This product provides global access to a broad range of copper mining companies by tracking the Solactive Global Copper Miners Total Return Index. Holding 28 stocks in its basket, the fund is slightly concentrated on the top firm at 7.02% of the assets while the other firms hold less than 5.3% share. Canadian firms take the largest share at 26%, while China, United Kingdom and Mexico also receive a double-digit exposure each. The product has managed $39.4 million in AUM while charges 65 bps in fees per year. It trades in a light volume of 48,000 shares a day on average.
Though most of the stocks in the fund’s portfolio delivered strong returns, a few were the real stars, having gained more than 20%. Below we have highlighted the best-performing stocks in the ETF with their respective positions in the fund’s basket:
Best Performing Stocks of COPX
Kaz Minerals PLC : The stock has been flying higher, having surged over 43.3% this month. The stock has seen positive estimate revision of a couple of cents for the current year over the past one month but has a Zacks Rank #4 (Sell) with a VGM Style Score (V stands for Value, G for Growth and M for Momentum) of C. The Industry Zacks Rank in the bottom 32% is also disappointing. Kaz Minerals occupies the top position in the fund’s basket with 7% of total assets.
HudBay Minerals Inc. (HBM - Free Report) : This stock takes the fourth spot in the fund’s basket with 5% allocation. It has also delivered incredible returns of 29.5% this month. The stock has seen negative earnings estimate revision of a couple of cents for this fiscal year over the past one month but has a whopping earnings growth rate of 216.67%. HudBay Minerals has a Zacks Rank #5 (Strong Sell) with a VGM Style Score of A and a dismal Zacks Industry Rank in the bottom 7%.
Teck Resources Ltd (TECK - Free Report) : This stock takes the fifteenth position in the fund’s basket with 4% of assets. It has gained 22.6% this month and has seen negative earnings estimate revision of 10 cents over the past one month for this year. However, its earnings are expected to grow a massive 119.93%. TECK currently has a Zacks Rank #3 (Hold) with a VGM Style Score of A but a dismal Zacks Industry Rank in the bottom 7% (read: Is Surprise in the Cards for Materials ETFs in Q2 Earnings?).
Freeport-McMoran Inc. (FCX - Free Report) : The stock has risen 20.7% and carries a Zacks Rank #3 with a VGM Style Score of A. Though the stock has seen negative earnings estimate revision of three cents for this year over the past one month, its earnings are expected to grow 310.63%. However, Freeport-McMoran has an ugly Zacks Industry Rank in the bottom 32%. The stock is the sixth firm and accounts for 4.8% share in FCX.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>