Tuesday, 15 March 2011
By Chris Flood
Published: March 15 2011 18:53 | Last updated: March 15 2011 18:53
Exchange traded funds tracking companies linked to the nuclear energy industry have plunged as a result of the the crisis affecting Japan‘s Fukushima reactors in the wake of the earthquake and tsunami .
Nuclear industry ETFs have tracked losses for uranium mining equities and companies involved in nuclear power plant construction as investors have begun to reassess the prospects for the nuclear energy industry not only in Japan also in Germany where the government on Tuesday has suspended energy production at seven nuclear power plants.
All of the ETFs linked to the nuclear energy industry have seen massive increases in their trading volumes this week accompanied by sharp falls in their net asset values.
On Monday, US regulators stepped in to impose a “circuit breaker” to preventshort selling in the PowerShares Global Nuclear Energy portfolio, known by its ticker PKN.
PKN’s price has dropped 11.3 per cent since last Thursday but its trading volumes recorded a huge spike on Monday, jumping to 176,500, almost 12 times its average daily trading volumes this year.
PKN is a tiny ETF with assets of just $8m at the end of February. It failed to attract any fresh investor inflows in the first two months of 2011 after seeing net outflows of $3m last year.
The nuclear industry ETF run by ETF Securities (the ETFX WNA Global Nuclear Fund) has seen the largest price decline to date, falling about 24 per cent since Thursday’s close with Japanese companies making up almost a quarter of the weightings in this product.
This ETF has gathered $40.2m from investors since its inception. Its net asset value has dropped to $45.9m from $49.6m before the earthquake hit. Lightly traded in normal circumstances, it also also saw a massive increase in its trading volumes on Monday.
The largest nuclear industry ETF, the Market Vectors Uranium & Nuclear Energy ETF, known by its ticker NLR, has fallen 12.2 per cent since last Thursday.
NLR had assets of $296m at the end of February. It gathered $21m in new cash in the first two months of 2011 after attracting inflows of $78m in 2010.
NLR tracks the DAXglobal Nuclear Energy Index so it has a large weighting (39.4 per cent) in uranium mining companies as well as a 24.2 per cent exposure to nuclear energy production and 17.4 per cent weighting in plant infrastructure.
The iShares S&P Global Nuclear Energy Index Fund, known by its ticker, NUCL, has fallen 14.1 per cent since last Thursday. It has exposure to Cameco, the uranium mining company, Mitsubishi Electric and the Tokyo Electric Power company.
Global X has a ETF which is specifically devoted to the uranium mining industry, known by its ticker URA.
Although, only launched in November 2010, URA had accumulated assets of $204m before the earthquake earthquake struck. However, the share price has dropped 16.8 per cent since last Thursday with daily trading volumes hitting a record on Monday, more than 8 times the average levels seen so far this year.
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Posted by Reg Illingworth at 19:15