European ETF trading commentary for the week ending 30 October 2009, provided by LaBranche Structured Products Europe (LSPE).

The equity market lost 5% last week and our creations to redemptions ratio was 7:4 in favour of redemptions. However, buyers and sellers were evenly balanced.

The focus last week was clearly on the property sector and LSPE sold ETFs tracking property investments, including the iShares FTSE EPRA/NAREIT UK ETF (LSE: IUKP), which accounted for a substantial portion of our creations. Investors appear bullish on the UK property market given that a rate hike seems unlikely in the near future.

We saw a lot of investment and creations in the iShares FTSE BRIC 50 ETF (LSE: BRIC) following bullish investment bank research notes on the Chinese economy and the surprise forex tax on Brazilian investments (which does not apply to the iShares BRIC ETF as it holds ADRs). Meanwhile, we saw substantial investments in the iShares MSCI North America ETF (LSE: INAA) but large redemptions in Far-East Asia funds.

Sector products tracking the DJ Stoxx 600 Construction and Materials index (SXOP) suffered a 7.5% decline last week, with the index’s two main underlying stocks (Rio Tinto and BHP Billiton) both losing more than 11%. The DJ Stoxx 600 Insurance index (SXIP) also fell, losing 8.5% following a negative statement from ING. However, we saw buyers of ETFs tracking the DJ Stoxx 600 Oil & Gas (SXEP) and Food & Beverage (SX3P) indices, which both gained around 1.1%.

As we mentioned last week, please bear in mind that the Tokyo Stock Exchange is closed tomorrow, which will affect all Japan ETFs.

This report is not an offer to sell or a solicitation of any investment products or other financial product or service, an official confirmation of any transaction, or an official statement of LSPE.