By Zimele Mbanjwa
FNB ETN Quarterly Update - 3Q2
The FNB ETNs had on aggregate, a modest third quarter despite global equities posting generally strong gains. Equities were initially boosted by a relief rally as trade tensions eased, and new tariff agreements were reached ahead of the US President's 1 August tariff deadline. Dollar weakness and expectations of US rate cuts, spurred by signs of labour market strain, supported the rally, while enthusiasm around AI continued to lift tech stocks globally. The MSCI World Index rose 7.4%, with emerging markets outperforming (+10.9%) thanks to a robust Chinese equity performance. US equities surged (S&P 500: +8.1%, Russell 2000: +12.4%), led by the Magnificent 7 (+15.6%) amid AI deal momentum. Over the period, the rand gained ~2.5% against the greenback, thus seeing to it that the Quanto ETNs (without currency exposure) outperformed the Compo ETNs (with currency exposure).
The notable quarterly outperformers within the ETN basket were tech players Alphabet, Apple, Tesla, Palantir, ASML, Nvidia and Broadcom all scoring growth in the double digits. We also saw the Global Clean Energy ETF posting high teens growth as clean energy stocks rallied amid booming electricity demand from data centres and clean tech manufacturing.
On the other end of the spectrum 12 of the 32 FNB ETNs declined in local currency terms. Novo Nordisk saw the most significant decline after it slashed its full-year sales growth forecast due to slower-than-expected demand for its flagship obesity and diabetes drugs, Wegovy and Ozempic. Though not as deep as Novo, Netflix and Adobe also fell into the red with the former being pressured by analyst downgrades and profit taking, while the latter continued to face investor doubts about rising competition from AI-powered creative tools and its ability to monetise its AI offerings (like Firefly).
