Standard Bank lists EFT on NSX
Hot on the heels of the dual listing of its exchange trade funds on the Namibia Stock Exchange by ABSA Capital last week, Standard Bank Group will this week avail its exchange traded funds to Namibian investors. The Namibia Stock Exchange approved the the dual listing of the palladium backed exchange traded fund, AfricaPalladium on 26 September 2014.
Johann Erasmus, Head of Global Structuring at Standard Bank Group said, “The AfricaPalladium ETF listed on the NSX will invest directly in palladium metal and tracks the Namibia Dollar price of the metal.
The AfricaPalladium ETF will allow Namibian investors to gain direct exposure to physical palladium via a liquid listed instrument in a simple and cost-efficient way, without any of the usual costs and risks of ownership.”
AfricaPalladium is the second largest palladium exchange traded fund globally, attracting in excess of 560,000oz of palladium valued in excess of R5 billion from investors since its inception on 24 March 2014 on the Johannesburg Stock Exchange (JSE).
Erasmus added, “The long-term fundamentals for palladium are promising, as the demand for palladium has outstripped production over the last few years and this trend seems set to continue for the foreseeable future.”
Standard Bank estimates that approximately 530,000oz of palladium production has been lost due to mining strikes in South Africa and predicts the global market for the metal will remain in deficit until at least 2016.
That’s likely to see the palladium price average USD788/oz this year before climbing to USD875/oz in 2015, USD900oz in 2016 and USD950/oz in 2017, according to Standard Bank’s estimates.
Other factors that are likely to keep the palladium market in deficit include ongoing uncertainty about supplies from Russia, the world’s largest palladium producer, as well as increasing demand from United States and China’s automotive industry. Standard Bank estimates a global palladium deficit of 1.65m oz for 2014, 1.43m oz in 2015 and 1.88m oz in 2016.
“Commodity exchange traded funds are viewed as a separate asset class and the commodity itself is a good investment to compliment one’s portfolio, said Erasmus.
Equities can give you a different leverage that changes with underlying company fundamentals.
The commodity gives you a broader exposure to the economy and in fact to economies outside of Africa. The commodity ETFs offer investors a different investment class with several benefits including exposure to the physical commodity, some level of protection from negative real interest rates and a hedge against currency depreciation.
In addition to the AfricaPalladium ETF, Standard Bank also has the AfricaGold and AfricaPlatinum ETF’s on the JSE.
The AfricaPalladium, ETFs will be treated as a local asset and have no exchange control implications for Namibian investors.