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Top ETF Stories of November

Sanghamitra Saha

The Wall Street was upbeat last month on trade optimism, moderate earnings and a strong start to the holiday season despite subdued consumer confidence data. SPDR S&P 500 ETF Trust SPY added 3.3% in the month and SPDR Dow Jones Industrial Average ETF Trust DIA andInvesco QQQ Trust QQQ jumped 4.1% each (read: What Soft Confidence? 3 ETFs & Stocks for Solid Holiday Buying).

Against this backdrop, we highlight the key ETF events of last month.

Wall Street at All-Time High

U.S. stocks have been rallying since the news of the phase-one U.S.-China trade deal emerged in October. The rally picked up in November on President Trump’s announcement that the U.S. and Chinese negotiators were "close" to a "phase one" trade deal. The key U.S. equity indexes hit fresh records multiple times in the month. SPY hit a high of $315.48 at month-end while QQQ hit a high of $206.05 on Nov 27.

Ebb and Flow of Trade Tensions

The month was all about the ebb and flow of U.S.-China trade tensions. While on one hand, Trump called the initial level of a trade deal close, the U.S. President signed a bill in support of Hong Kong protesters which undermined China’s interests. As a result, all trade-sensitive securities saw some volatility in the month. Overall, iShares China Large-Cap ETF FXI has lost about 3.7% in the past month (as of Dec 2, 2019).

Not all was dicey on the trade front. Another trade negotiation hogged investors’ attention — the United States-Mexico-Canada (USMCA) deal. Speaker Nancy Pelosi said on Nov 25 that the deal is ‘within range’ and House Democrats and the Trump administration have resolved their issues on the USMCA but a final review is still to be done(read: USMCA Trade Deal 'Within Range': ETFs to Benefit).

This puts focus on Mexico and Canada ETFs like iShares MSCI Mexico Capped ETF EWW and iShares MSCI Canada ETF EWC.

Healthcare Sector Tops

FDA approvals, solid merger-acquisition environment and positive drug data have made the healthcare sector a star performer in November. Virtus LifeSci Biotech Clinical Trials ETF BBC and iShares U.S. Healthcare Providers ETF IHF are some of the top performers in the space (read: Healthcare Sector Outperforming: 5 Best ETFs & Stocks QTD).

Online Shopping on the Rise

A six-day shorter holiday shopping season this year led retailers to come up with deals earlier than usual, which drove the retail sales numbers in November. Online sales for Thanksgiving and Black Friday rose 17% year over year, according to Adobe Analytics. Black Friday online sales hit a record $7.4 billion this year. ProShares Online Retail ETF ONLN is a clear winner given the trend. Also, VanEck Vectors Retail ETF RTH grabs attention as it has wide exposure to winning retail companies like Wal-Mart WMT and Target TGT.

Marijuana Crash

Downbeat earnings dealt a blow to the marijuana space in November. However, amid an awful earnings scenario, the marijuana space turned around in mid-November on bill hopes. Shares of marijuana companies rose on Nov 21 after a U.S. congressional committee passed a legislation that would end the federal embargo on weed (read: Can Bill Hopes Relieve Earnings-Induced Pain in Pot ETFs?).

The latest bill will enact a 5% federal sales tax on marijuana products that are manufactured in or imported into the United States and obliterate past criminal records. Analysts are still doubtful about the near-term prospects of the space. The sponsors of the bill warned that the Senate was unlikely to approve it anytime soon. 

Overall, marijuana ETFs like ETFMG Alternative Harvest ETF MJ, Global X Cannabis ETF POTX and Amplify Seymour Cannabis ETF CNBS lost about13.6%, 16.2% and 12%, respectively, in the past month.

Alibaba’s Grand Hong Kong Debut

Chinese e-commerce giant Alibaba Group BABA made a blockbuster Hong Kong debut in late November, with the stock rising 7%. The company's “secondary listing could raise as much as $12.9 billion, making it the largest public offering so far this year.” Alibaba’s Hong Kong shares, trading under the stock code 9988, will be added to the Hang Seng Composite Index on Dec 9 (read: ETFs to Tap Alibaba's Stunning Hong Kong Debut).

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