THE appetite for precious metal exchange-traded funds (ETFs) among institutional investors has resulted in the listing of two palladium ETFs on the JSE within a week.
Standard Bank and Absa listed their palladium ETF products last Monday and Thursday, respectively.
Vladimir Nedeljkovic, the head of investments at Absa Capital, said the bank’s NewPalladium ETF would broaden the scope for retail and institutional investors.
“Investors can ask themselves [if] they want exposure to the underlying company itself or commodities overall,” Nedeljkovic said during the launch of NewPalladium.
About 800 000 NewPalladium securities were sold on Thursday and another 800 000 on Friday.
Standard Bank’s palladium ETF, AfricaPalladium, grew to just under R300 million, or 33 000 ounces, under management in its first week.
“This is a very good result considering that the rand price of palladium reached its highest price in the last decade in the week prior to the listings,” said Johann Erasmus, the head of executive global structuring at Standard Bank.
“I believe the long-term fundamentals for the metal [are] promising as over the past few years demand for palladium has outstripped production and this trend looks to be continuing for the foreseeable future,” Erasmus said.
Standard Bank planned to list a gold ETF and platinum ETF on April 7 – called AfricaGold and AfricaPlatinum – and might list in other jurisdictions to grow its range of exchange-traded products, he added.
Absa and Standard Bank store the metal that backs their ETFs in London.
Before the launch of NewPalladium, Absa already had two successful precious metal ETFs. NewGold, which listed in 2004, is the largest ETF in Africa. Absa Capital listed its platinum-backed ETF, NewPlat, in April last year.
Nedeljkovic said NewGold was backed by 1.2 million ounces of gold and NewPlat by 1 million ounces of platinum.
They were the only South African funds to be listed on multiple stock exchanges in Africa, Nedeljkovic said. NewGold was listed in Botswana, Nigeria, Ghana and Mauritius. NewPlat was listed in Mauritius, and more listings were in the pipeline.
South Africa is the biggest producer of platinum and the largest palladium producer after Russia.
Palladium is a platinum group metal produced as a by-product of platinum mining and the ETF listings come amid a 10-week wage strike on the platinum belt and tensions between Russia and Ukraine.
“We have sufficient supply of the metal [platinum], but going forward there might be pressure on the prices of the metal if the strike continues,” Nedeljkovic said.
He said the NewPlat ETF had bought a lot of the metal as companies had built up stockpiles ahead of the strike.