Global ETF / Asia Equity Strategy Earth/Strategic Metals ... · 1. "The ETFs specifically mentioned...

1. "The ETFs specifically mentioned herein may not be recognised, authorised or otherwise registered in Singapore for retail distribution. This research is intended for

general circulation only and its contents do not take into the specific investment objectives, financial situation or particular needs of any particular person. Before

deciding to purchase any ETF, an investor should seek advice from a financial adviser regarding the suitability of the investment product, taking into account his specific

investment objectives, financial situation and particular needs.”

2. “DBS, in publishing this research on ETFs, and DBSV in circulating the research, are not and should not be taken or considered as having made an offer,

recommendation or solicitation to buy or sell the ETFs or to enter into a transaction or to participate in any particular trading or investment strategy. Any reference to

any specific company, financial product or asset class in whatever way is used for illustrative purposes only and does not constitute a recommendation on the same.”

ed: TH / sa: PY, CS

Bonding with Metals

Regional Equity Strategist

Joanne Goh, +65 68785233; [email protected] Regional Equity Research, [email protected]

• As global industrial production accelerates,

commodity prices for hot rolled steel, copper,

aluminum, nickel and zinc are the first to move

• Not a repeat of the “supercycle” but a “classic

commodity cycle” — first driven by supply constraints,

then by demand surge

• Investors can gain exposure to the uptrend through

selected Global ETFs and China/Korea/Indonesia

stocks

Industrial commodities have been on a tear since mid -2017

when the LME Index of Base Metals climbed to its highest

level since 2014. Copper, iron ore, and niche metals such as

cobalt and lithium all shot up to their new highs recently,

buoyed in part by the strongest and most widespread

growth since the financial crisis of 2008. With the metal

markets tightening due to underinvestment and producers’

attempts to rein in output, some investors are considering

this asset class for their investments.

It is still the supply issues rather than demand that have

provided the main impetus for the recovery in industrial

metals. This time around, China, the world’s largest

consumer in the commodity complex has prioritised cutting

pollution leading to restrictions in mines and smelters

including those for steel and coal. These clampdowns on the

supply side and lack of investments in new mines globally

could put metal commodities on a firm footing. It takes at

least five years and big bucks to get a mine up and running

into full production once economically viable quantities of

copper, nickel or zinc have been discovered.

The key message for investors is to pick and choose these

metal/mining commodities and the companies that produce

them carefully. Each commodity has its own unique story

and fundamentals. This is not the case where a rising tide

lifts all the boats.

List of securities to gain exposure to Metals upcycle

Source: ETF Asia Analytics, Inc., Bloomberg Finance L.P., DBS Bank, February 23, 2018

Price

Bloomberg (US$) A UM Expense

Company Code (23 F eb) (US$) (%)

ETF exposure

SPDR S&P Metals and

Mining ETFXME US 37.36 $988.40 0.35%

iShares MSCI Metals and

Mining Producers ETFPICK US 36.49 585.6 0.39

Global X Lithium and

Battery Tech ETFLIT US 37.23 1,117.00 0.76

VanEck Vectors Rare

Earth/Strategic Metals ETFREMX US 30.44 232.4 0.57

VanEck Vectors Steel ETF SLX US 50.79 177.6 0.55

Global X Copper Miners ETF CPOX US 28.11 86.6 0.65

PowerShares DB Base Metals

FundDBB US 19.36 363.3 0.82

Bloomberg Price Target Upside

Stock exposure Code (23 F eb) price (%)

China Molybdenum Co Ltd 3993 HK HK$6.75 $8.00 18.5%

PT Timah TINS IJ Rp1070 under rev iew under rev iew

Korea Zinc 010130 KS KRW516000 610,000 18.2%

DBS Group Research . Equity 27 Feb 2017

Global ETF / Asia Equity Strategy

Investment focus Refer to important disclosures at the end of this report

mailto:[email protected]

Flash Note

Overview

The Global Economic Order is rapidly changing and creating

tremendous opportunities for metal and mining investors. As

global industrial production accelerates, commodity prices for

hot rolled steel, copper, aluminum, nickel and zinc are the

first to move. These “base metals” are the backbone of the

world’s industrial economy and are used in cars, buildings

and just about every consumer item.

Industrial commodities have been on a tear since mid -2017

when the LME Index of Base Metals climbed to its highest

level since 2014. Copper, iron ore, and niche metals such as

cobalt and lithium all shot up to their new highs recently,

buoyed in part by the strongest and most widespread growth

since the financial crisis of 2008. With the metal markets

tightening due to underinvestment and producers’ attempts

to rein in output, some investors are considering this asset

class for their investments.

Just as different equity sectors have unique characteristics

that can respond very differently to various economic

scenarios, commodities behave the same way. Note the

following issues relevant to metals and mining:

• Industrial metals such as copper or aluminium tend to be

cyclical with performance linked to expectations for

economic growth particularly in the manufacturing

sector.

• The metals/mining category is driven by the dynamics of

supply and demand. As canonical models suggest, where

these two elements meet, the price of the commodity is

then set. While this current metals cycle appears to be

turning up, this is not a repeat of the “supercycle” record

highs during the past decade with a big upward shift

driven by China as the 800-pound gorilla of commodity

consumption in the 2007 bull market. Rather we are in a

“classic commodity cycle” and this time round, while

demand is strong, it is driven by supply constraints rather

than a surge in consumption.

• There has been under-investment in the last decade in

metals and the struggles of the mining firms have been

well documented with capex reductions, risks of credit

downgrades on their total debt and while supply is at a

relatively comfortable level, investors are starting to see

producers taking risks to store up for the future. Given

the recovery in metal prices, it is interesting to see the

reported rebound in earnings of titans Anglo American

and Glencore.

• The metals/mining industry is seeing new demand for

applications with growth projections in electric cars.

Nickel, for long a laggard base metal, is set to see

demand soar as battery use grows while copper usage

should also rise with the number of charging points.

Cobalt, essential to modern battery technology, is the

industry’s new darling and essentially a by-product of

nickel and copper production. About 50% of cobalt

concentrates come from the Democratic Republic of

Congo. The demand for cobalt in electric car usage

competes with the existing demand from superalloys

used in the aerospace industry. Apple, with its iPhones

and iPads, is in talks to buy cobalt directly from miners.

Cobalt is an essential ingredient in lithium-ion batteries

for smartphones while lithium cobalt oxide is a game

changer in hybrid vehicle and electric vehicles, where the

main problem has been with battery storage. Lithium is

thus the main material in growing demand.

• It is still the supply issues rather than demand that have

provided the main impetus for the recovery in industrial

metals. This time around, China, the world’s largest

consumer in the commodity complex, has prioritised

cutting pollution leading to restrictions in mines and

smelters including those for steel and coal. These

clampdowns from the supply side and lack of investments

in new mines globally could put metal commodities on a

firm footing. It takes at least five years and big bucks to

get a mine up and running into full production once

economically viable quantities of copper, nickel or zinc

have been discovered.

• The key message for investors is to pick and choose these

metal/mining commodities and the companies that

produce them carefully. Each commodity has its own

unique story and fundamentals. This is not the case

where a rising tide lifts all the boats.

Why Invest in Industrial Metals and Mining ETFs:

• The outlook for macroeconomic, geological and

investment theme for 2018 supports an end-user demand

for base metals as well as good prices. These

commodities of basic raw materials are linked to the

component of inflation, making them ideal inflation

hedges.

• The long-term negative relationship between

commodities and other asset classes is well documented.

Adding assets like commodities with low correlations

provides for better diversification and risk-adjusted

returns.

• China continues to sustain its super-economic growth

power status in the world, e.g., China’s One Belt, One

Road Agenda calls for over 900 infrastructure projects

worldwide (with US$1.5tr spending) that need these

mining resources.

Page 2

Flash Note

The highlights of each of the industrial metals’ outlook in

2018:

1) The outlook for copper is attractive as demand outstrips

supply with more industrial applications. Meanwhile,

cobalt and lithium face surging demand from electric cars

and consumer electronics.

2) Iron ore is expected to remain in surplus over the near

term but with structural shift calling for cleaner

environmental improvements, iron ores are attracting

more premium prices.

3) Nickel and zinc are set to operate at a deficit with the

elevated demand for auto production and stainless steel.

Getting exposure through global ETFs

Metal ETFs may pose a challenge to investors as commodity

ETFs are structured very differently from most typical bond or

stock funds. The logic for owning commodities is simple —

they provide diversification to holdings of traditional stocks

and bonds.

Diversification has its downside — of the 90 ETF commodity

funds tracked by Morningstar, the majority of them have

negative five-year trailing results. Also, while the logic of

owning them is simple, the execution is not. First, there is a

question of structure. Although exchange traded funds are

generally referred to as ETFs, they are typically exchange

traded notes or partnerships. Many of the most popular

commodity funds are known as ETNs or exchange traded

notes whereas ETFs represent an ownership in the underlying

asset.

ETNs are senior, unsecured debt securities, and are structured

more like bonds with a promise to pay something. ETNs such

as the iPath Bloomberg Commodity Index ETN (DJP) are taxed

like stocks but are debt instruments (critics equate them to

uncollateralised loans which means there is also the risk of

issuer default). The US$35.4bn Gold Trust (GLD), which is the

largest ETF Commodity product by far, is actually backed by

gold bullions. The trade-off is that it and other similar funds

are categorised as collectibles for tax purposes which means

long-term gains are taxed as ordinary income though capped

at 28%. Still, other funds that are structured as commodity

pools are taxed as partnerships. Investors have to deal with

Schedule K1 tax forms which add to another tax complexity.

Of course, for many investors, the appeal of commodity ETFs

is the ability to make tactical bets. So far in 2018, commodity

ETFs have posted net inflows of US$450m or 0.65% of the

assets under management.

• If it is true diversity you seek, it would be wise to choose

your vehicles carefully by adhering to our firm’s proven

disciplined process and selection of investment vehicles

with proper risk-adjusted strategic returns.

• Investors can gain exposure through the list of ETFs with

diversified stocks or through individual stocks we cover in

Asia:-:

Consider these Metals and Mining ETFs:

XME US

SPDR S&P Metals & Mining ETF is an exchange-traded fund

incorporated in the US. The fund's objective is to replicate as

closely as possible the performance of the S&P Metals &

Mining Select Industry Index, an equal-weighted index.

PICK US

iShares MSCI Global Select Metals & Mining Producers ETF is

an exchange-traded fund incorporated in the US. The ETF

seeks investment results that correspond generally to the

price and yield performance, before fees and expenses, of

the MSCI ACWI Select Metals & Mining Producers Ex Gold &

Silver Investable Market Index.

LIT US

Global X Lithium & Battery Tech ETF is an exchange-traded

fund incorporated in the US. The fund seeks investment

results that correspond to the price and yield performance of

the Solactive Global Lithium Index.

REMX US

VanEck Vectors Rare Earth/Strategic Metals ETF is an

exchange-traded fund in the US. The fund seeks to replicate

the performance of the MVIS Rare Earth/Strategic Metals

Index. The constituents include a majority of mining

companies domiciled in the US, China, and Australia. The

fund rebalances its holdings on a quarterly basis and weights

them based on market cap.

SLX US

VanEck Vectors Steel Index Fund is an exchange-traded fund

incorporated in the US. The fund seeks investment results

that correspond to the price and yield of the NYSE Arca Steel

Index.

COPX US

The Global X Copper Miners ETF is an exchange-traded fund

incorporated in the US. The fund seeks to provide investment

results that correspond generally to the price and yield

performance, before fees and expenses, of the Solactive

Global Copper Miners Index ("Underlying Index").

Page 3

Flash Note

Getting exposure through stocks listed in Asia:-

In Asia, we recommend the following mining stocks under

our coverage to ride on the industry upcycle:-

China Molybdenum Co Ltd (H) (3993 HK, BUY, 12-

mth Target Price: HK$8.00)

CMOC is a scarce cobalt player. The company is a leading

global copper miner and producer with strong cost

advantage, and the world’s second largest cobalt miner and

producer. We think the company is well leveraged to the

upcycle of copper and cobalt. In 2018, for copper, we

foresee tightening raw material supply due to: i) collapse in

investment in the copper sector since the 2015-16

downcycle; ii) more than forty mine union enterprise

agreements would be renegotiated in top copper mining

countries Chile and Peru. For cobalt, the upcycle is driven by

limited raw material resources and strong growth in new

energy vehicles (NEV). The global cobalt supply deficit started

in 2016 and we expect this deficit to widen further owing to

limited output prospects as cobalt is a by-product, and

China’s consumption growth of 6-9% in 2018-20 driven by

NEV growth.

PT Timah (TINS IJ, BUY, 12-mth Target Price: Under Review)

As the world’s third largest refined tin producer and

Indonesia’s biggest tin player, its share price largely tracks tin

prices. Despite positive earnings surprise in 3Q17, its share

price had been weighed down by weak tin prices on

concerns over higher tin metal exports from China. However,

LME tin price has been gaining strongly YTD in 2018, hitting

a 3.5-year high in Feb 2018. Simultaneously, PT Timah’s

share price has also risen substantially (up c.40% YTD). We

expect its OP to climb up y-o-y in 2018 thanks to higher tin

prices and its facilities upgrade that would lower tin ore costs.

Also, we hold positive long-term perspective on tin market, in

anticipation of sustained deficit in the global refined tin

market and new tin demand created by technological shift

(chemicals, batteries and energy-related technologies). We

are currently reviewing our TP on the stock.

Korea Zinc Co (010130 KS, BUY, 12-mth Target Price:

KRW610,000)

Zinc and lead prices on LME (London Metal Exchange) have

risen 8.4% and 4.1% YTD, respectively. Amid tight market

conditions, higher metal prices will continue to underpin

Korea Zinc’s earnings growth. According to our sensitivity

analysis, 1% increase in zinc and lead prices lift its operating

profits by 2.3% and 1.3% respectively. The company’s sales

volume target for its major products in 2018 are: 650k tons

of zinc (+9% y-o-y), 410k tons of lead (-3% y-o-y) and 1.9k

tons of silver (-5% y-o-y). The decline in sales volume for lead

and silver would stem from shortage of lead ore. In 2018, we

expect zinc price growth to likely decelerate, while lead price

will strengthen on higher demand from hybrid automobiles

and drive earnings growth. We recommend a BUY, with

KRW610,000 TP which is derived from a residual income

valuation model (RIM) and implies 15.8x FY18F PE and 1.6x

FY18F P/BV.

Key parameters for list of ETFs

Source: ETF Asia Analytics, Inc., Bloomberg Finance L.P., February 23, 2018

Key valuation metric of stock list

Source: DBS Bank

12-mth

Mkt Price Target

Bloomberg Cap (S$) Price %

Company Code (US$m) 23-F eb (S$) Upside Rcmd 18F 19F 18F 19F 18F 19F 18F 19F 18F 19F

China Molybdenum

Co Ltd

3993 HK Equity 18,636 6.750 8.000 19% BUY 24.9x 22.1x 7.8x 6.6x 2.9x 2.7x 2.3% 2.6% 12% 17%

PT Timah TINS IJ Equity 583 1,070 under

review

under

review

under

review

22.2x 18.8x 7.6x 6.8x 1.3x 1.2x 1.3% 1.5% 6% 12%

Korea Zinc 010130 KS Equity 9,042 516,000 610,000 18% BUY 13.5x 12.7x 6.9x 6.2x 1.5x 1.4x 1.6% 1.6% 12% 16%

Price/

BV

(x)PE (x)

EV /EBITDA

(x) (%)

ROEDiv Y ld

(%)

Bloomberg Ticker

Metals & Mining ETFs Price (US $)

Assets Under Mgmt. ($mm)

Avg. Vol. (000)

Expense Ratio %

YTD %

XME SPDR S&P Metals and Mining ETF $37.36 $988.4 1,238 0.35% 2.22%

PICK iShares MSCI Metals and Mining Producers ETF 36.49 585.6 144 0.39 5.37

LIT Global X Lithium and Battery Tech ETF 37.23 1,117.0 353 0.76 -3.95

REMX VanEck Vectors Rare Earth/Strategic Metals ETF 30.44 232.4 151 0.57 1.16

SLX VanEck Vectors Steel ETF 50.79 177.6 41 0.55 10.77

CPOX Global X Copper Miners ETF 28.11 86.6 21 0.65 2.78

DBB PowerShares DB Base Metals Fund 19.36 363.3 164 0.82 -0.23

Page 4

XME US EquityFund Objective & Information Risk profile (refer to notes below)

EIP / SIP product type SIP

Replication strategy Full

Leverage No

Inverse No

ETF / ETN type ETF

Fund vs. Benchmark Performance (1-year) Inception Date

30D AVG Daily Turnover 37.3k Pri. Exchange LeverageBeta to MSCI World Index 2.05 Traded Currency Index PE1YR Tracking Error (NAV) 0.06% Traded Lots Index PB

Fund Data Fund Allocation (Geographical and Sector)

Fund ManagerTotal Annual Fees (%) 0.35%Replication strategyPrice (USD)NAV (USD)Premium/ (discount) to NAVAUM (USD million)Net inflows for the month (23.94)Average PE 17.2xAverage PB 1.6xDividend Yield 1.1%Dividend Frequency Quarter

Top 10 Holdings (%)

Century Aluminum Co 5.8United States Steel Corp 5.1Freeport-McMoRan Inc 5.1CONSOL Energy Inc 5.0Commercial Metals Co 4.7Allegheny Technologies Inc 4.7Peabody Energy Corp 4.6Cleveland-Cliffs Inc 4.5Steel Dynamics Inc 4.5Arch Coal Inc 4.5Source: Bloomberg Finance L.P., DBS Bank

SPDR S&P Metals & Mining ETF (U.S.)

Precious Metals Equity

22/06/2006NYSE Arca 0






recommendation or solicitation to buy or sell the ETFs or to enter into a transaction or to participate in any particular trading or investment strategy. Any reference to any

specific company, financial product or asset class in whatever way is used for illustrative purposes only and does not constitute a recommendation on the same.”

-0.02%

Full

SPDR S&P Metals & Mining ETF is an exchange-traded fundincorporated in the USA. The Fund's objective is to replicate as closelyas possible the performance of the S&P Metals & Mining Select IndustryIndex, an equal-weighted index.

Notes to risk profile:-1. EIP or SIP (for Singapore-based investors) refers to the product being classified as Excluded or Specified Investment Product. SIPs havestructures, features and risks that may be more complex and require more knowledge to understand. Retail investors are required to be provided withenhanced safeguards, including an assessment of these investors’ investment knowledge or experience.

2. Leveraged and inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not useleverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable forall investors and should be utilized only by investors who understand leverage risk and who actively manage their investments.3. ETF / ETN type: Both are designed to provide investors access to the returns of various market benchmarks. ETNs are structured products thatare issued as senior debt notes, while ETFs represent a stake in an underlying asset.

1 1.6xUSD 15.4x

988.43

26-Feb-18

State Street ETF/USA

37.3637.37

99.10.9

0 20 40 60 80 100

U.S.Canada

76.518.2

0.15.2

0 20 40 60 80 100

Basic MaterialsEnergy

GovernmentIndustrial

0

5000

10000

15000

20

30

40

50

27/02/2017 27/04/2017 27/06/2017 27/08/2017 27/10/2017 27/12/2017NAV SPDR S&P Metals & Mining ETF underlying S&P Metals and Mining Select I rebase

Volume traded (R, 000s)

PICK US EquityFund Objective & Information Risk profile (refer to notes below)



Leverage No

Inverse No

ETF / ETN type ETF




Fund ManagerTotal Annual Fees (%) 0.39%Replication strategyPrice (USD)NAV (USD)Premium/ (discount) to NAVAUM (USD million)Net inflows for the month 38.53Average PE 15.2xAverage PB 1.5xDividend Yield 2.3%Dividend Frequency Semi-Anl

Top 10 Holdings (%)

BHP Billiton Ltd 8.4Rio Tinto PLC 7.7Glencore PLC 7.6BHP Billiton PLC 5.0Vale SA 4.9Anglo American PLC 3.7Rio Tinto Ltd 3.0Freeport-McMoRan Inc 2.9POSCO 2.7ArcelorMittal 2.6Source: Bloomberg Finance L.P., DBS Bank

iShares MSCI Global Metals & M (Global)

Undefined Equity Equity

02/02/2012BATS 0








0.94%

Full

iShares MSCI Global Select Metals & Mining Producers ETF is anexchange-traded fund incorporated in the USA. The ETF seeksinvestment results that correspond generally to the price and yieldperformance, before fees and expenses, of the MSCI ACWI SelectMetals & Mining Producers Ex Gold & Silver Investable Market Index.



1 1.6xUSD 15.9x

585.60

26-Feb-18

iShares ETFs/USA

36.4936.15

12.15.0

14.90.22.0

7.82.9

1.61.10.30.2

0 20 40 60 80 100

U.S.Canada

U.K.France

GermanySwitzerland

LuxembourgSwedenNorwayFinland

Netherlands

97.00.40.30.0

2.3

0 20 40 60 80 100


FinancialGovernment

Industrial

0

500

1000

1500

20

25

30

35

40

27/02/2017 27/04/2017 27/06/2017 27/08/2017 27/10/2017 27/12/2017NAV iShares MSCI Global Metals & M underlying MSCI ACWI Sel Metal & Mining P rebase


LIT US EquityFund Objective & Information Risk profile (refer to notes below)



Leverage No

Inverse No

ETF / ETN type ETF




Fund ManagerTotal Annual Fees (%) 0.76%Replication strategyPrice (USD)NAV (USD)Premium/ (discount) to NAVAUM (USD million)Net inflows for the month (3.01)Average PE 88.4xAverage PB 2.5xDividend Yield 3.4%Dividend Frequency Annual

Top 10 Holdings (%)

Albemarle Corp 17.1FMC Corp 15.8Sociedad Quimica y Minera de C 7.5EnerSys 5.4GS Yuasa Corp 5.3Panasonic Corp 5.3LG Chem Ltd 5.2Tesla Inc 4.8BYD Co Ltd 4.7Samsung SDI Co Ltd 4.6Source: Bloomberg Finance L.P., DBS Bank

Global X Lithium & Battery Tec (Global)

Sector Fund-Energy Equity

23/07/2010NYSE Arca 0








0.57%

Full

Global X Lithium & Battery Tech ETF is an exchange-traded fundincorporated in the USA. The Fund seeks investment results thatcorrespond to the price and yield performance of the Solactive GlobalLithium Index.



1 2.9xUSD 41.4x

1117.06

26-Feb-18

Global X ETFs/USA

37.2337.02

43.43.6

0.10.2

10.62.0

11.44.7

11.64.9

7.5

0 20 40 60 80 100

U.S.CanadaFrance

SwitzerlandJapan

Hong KongSouth Korea

TaiwanAustralia

ChinaChile

60.84.6

14.819.8

0 20 40 60 80 100

Basic MaterialsCommunications

Consumer, CyclicalIndustrial

0

1000

2000

3000

20

30

40

50

27/02/2017 27/04/2017 27/06/2017 27/08/2017 27/10/2017 27/12/2017NAV Global X Lithium & Battery Tec underlying Solactive Global Lithium Index rebase


REMX US EquityFund Objective & Information Risk profile (refer to notes below)



Leverage No

Inverse No

ETF / ETN type ETF





Top 10 Holdings (%)

China Molybdenum Co Ltd 8.7China Northern Rare Earth Grou 6.8Xiamen Tungsten Co Ltd 6.5Eramet 6.2Iluka Resources Ltd 6.1Toho Titanium Co Ltd 6.1OSAKA Titanium Technologies Co 6.0Tronox Ltd 5.8Cia Ferro Ligas da Bahia - FER 5.4Assore Ltd 4.9Source: Bloomberg Finance L.P., DBS Bank

VanEck Vectors Rare Earth/Stra (Global)


28/10/2010NYSE Arca 0








0.53%

Full

VanEck Vectors Rare Earth/Strategic Metals ETF is an exchange-traded fund in the USA. The Fund seeks to replicate the performance ofthe MVIS Rare Earth/Strategic Metals Index. The constituents include amajority of mining companies domiciled in the US, China, and Australia.The Fund rebalances the holdings on a quarterly basis and market capweights them.



1 2.4xUSD 60.7x

232.40

26-Feb-18

VanEck Vectors ETFs/USA

30.4430.28

5.86.16.2

16.35.5

20.14.84.9

24.95.4

0 20 40 60 80 100

U.S.CanadaFranceJapan

Hong KongAustraliaMalaysia

South AfricaChinaBrazil

100.00.00.0

0 20 40 60 80 100

Basic MaterialsFinancial

Government

0

200

400

600

800

20

25

30

35

27/02/2017 27/04/2017 27/06/2017 27/08/2017 27/10/2017 27/12/2017NAV VanEck Vectors Rare Earth/Stra underlying MVIS Global Rare Earth/Strateg rebase


SLX US EquityFund Objective & Information Risk profile (refer to notes below)



Leverage No

Inverse No

ETF / ETN type ETF




Fund ManagerTotal Annual Fees (%) 0.55%Replication strategyPrice (USD)NAV (USD)Premium/ (discount) to NAVAUM (USD million)Net inflows for the month 4.45Average PE 14.4xAverage PB 2.2xDividend Yield 2.2%Dividend Frequency Annual

Top 10 Holdings (%)

Rio Tinto PLC 11.0Vale SA 8.7Ternium SA 8.6Vedanta Ltd 7.4Gerdau SA 5.5Cia Siderurgica Nacional SA 5.2United States Steel Corp 5.0Tenaris SA 5.0ArcelorMittal 4.6Nucor Corp 4.6Source: Bloomberg Finance L.P., DBS Bank

VanEck Vectors Steel ETF (Global)


16/10/2006NYSE Arca 0








0.09%

Full

VanEck Vectors Steel Index Fund is an exchange-traded fundincorporated in the USA. The Fund seeks investment results thatcorrespond to the price and yield of the NYSE Arca Steel Index.



1 N.A.USD N.A.

177.61

26-Feb-18

VanEck Vectors ETFs/USA

50.7950.75

37.811.0

18.24.1

19.57.4

2.0

0 20 40 60 80 100

U.S.U.K.

LuxembourgSouth Korea

BrazilIndia

Russia

88.20.7

11.2

0 20 40 60 80 100


Industrial

0

200

400

600

800

20

30

40

50

60

27/02/2017 27/04/2017 27/06/2017 27/08/2017 27/10/2017 27/12/2017NAV VanEck Vectors Steel ETF underlying NYSE Arca Steel Index rebase


COPX US EquityFund Objective & Information Risk profile (refer to notes below)



Leverage No

Inverse No

ETF / ETN type ETF





Top 10 Holdings (%)

First Quantum Minerals Ltd 6.0Zijin Mining Group Co Ltd 6.0Teck Resources Ltd 5.9Freeport-McMoRan Inc 5.8Southern Copper Corp 5.3Glencore PLC 5.1Grupo Mexico SAB de CV 4.9OZ Minerals Ltd 4.8Hudbay Minerals Inc 4.7KAZ Minerals PLC 4.6Source: Bloomberg Finance L.P., DBS Bank

Global X Copper Miners ETF (Global)

Precious Metals Equity

20/04/2010NYSE Arca 0








0.54%

Full

The Global X Copper Miners ETF is an exchange-traded fundincorporated in the USA. The seeks to provide investment results thatcorrespond generally to the price and yield performance, before feesand expenses, of the Solactive Global Copper Miners Index("Underlying Index").



1 N.A.USD N.A.

86.64

26-Feb-18

Global X ETFs/USA

28.1127.96

5.831.7

5.85.14.4

0.80.9

10.44.9

10.24.2

0 20 40 60 80 100

U.S.Canada

U.K.Switzerland

SwedenJapan

Hong KongAustralia

MexicoChinaChile

99.9

0 20 40 60 80 100

Basic Materials

0

200

400

600

15

20

25

30

35

27/02/2017 27/04/2017 27/06/2017 27/08/2017 27/10/2017 27/12/2017NAV Global X Copper Miners ETF underlying Solactive Global Copper Miners rebase


DBB US EquityFund Objective & Information Risk profile (refer to notes below)


Replication strategy Derivative

Leverage No

Inverse No

ETF / ETN type ETF




Fund ManagerTotal Annual Fees (%) 0.82%Replication strategyPrice (USD)NAV (USD)Premium/ (discount) to NAVAUM (USD million)Net inflows for the month 23.24Average PE N.A.Average PB N.A.Dividend Yield N.A.Dividend Frequency None

Top 10 Holdings (%)

LME ZINC FUTURE Jan19 18.1LME PRI ALUM FUTR Oct18 17.7LME COPPER FUTURE Feb19 17.1B 0 06/07/18 16.3B 0 05/03/18 14.5B 0 07/05/18 7.6B 0 03/01/18 5.9Premier U.S. Government Money 2.6PowerShares Treasury Collatera 2.2

Source: Bloomberg Finance L.P., DBS Bank

PowerShares DB Base Metals Fun (Global)

Commodity Commodity

05/01/2007NYSE Arca 0








0.20%

Derivative

PowerShares DB Base Metals Fund is an exchange-traded fundincorporated in the USA. The Fund's objective is to track the DBIQOptimum Yield Industrial Metals Index Excess Return.



1 N.A.USD N.A.

363.32

26-Feb-18

PowerShares ETFs/USA

19.3719.33

47.8

0 20 40 60 80 100

U.S.

47.80.0

0 20 40 60 80 100

GovernmentMortgage Securities

0

1000

2000

3000

4000

15

16

17

18

19

20

27/02/2017 27/04/2017 27/06/2017 27/08/2017 27/10/2017 27/12/2017NAV PowerShares DB Base Metals Fun underlying DB Commodity IDXDBCMYEIM rebase


Flash Note

DBS Bank recommendations are based an Absolute Total Return* Rating system, defined as follows:

STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)

BUY (>15% total return over the next 12 months for small caps, >10% for large caps)

HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)

FULLY VALUED (negative total return i.e. > -10% over the next 12 months)

SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

Share price appreciation + dividends

Completed Date: 27 Feb 2018 10:27:53 Dissemination Date: 27 Feb 2018 14:56:39

Sources for all charts and tables are DBS Bank unless otherwise specified.

GENERAL DISCLOSURE/DISCLAIMER

This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd, its respective connected and associated

corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii)

redistributed without the prior written consent of DBS Bank Ltd.

The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS

Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively,

the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other

factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or

warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without

notice. This research is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific

investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees

only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial

advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit)

arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not

to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons

associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group, may have

positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and

other banking services for these companies.

Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can

be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments.

The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may

not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no obligation to

update the information in this report.

This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned

schedule or frequency for updating research publication relating to any issuer.

The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and

assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on

which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual

results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED

UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:

(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and

(b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk

assessments stated therein.

Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets.

Flash Note

Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies)

mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the

commodity referred to in this report.

DBSVUSA, a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public

offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage

in market-making.

ANALYST CERTIFICATION

The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the

companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her

compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s)

primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate1 does not serve as an officer of the

issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real

estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the

management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or

his associate does not have financial interests2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has

procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of

research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment

banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment

banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the

DBS Group.

COMPANY-SPECIFIC / REGULATORY DISCLOSURES

1. DBS Bank Ltd, DBS HK, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), DBSV HK or their subsidiaries and/or other affiliates have

proprietary positions in SPDR S&P Metals and Mining ETF, recommended in this report as of 26 Feb 2018.

2. Neither DBS Bank Ltd, DBS HK nor DBSV HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research

Report.

Compensation for investment banking services:

3. DBS Bank Ltd, DBS HK, DBSVS, DBSV HK, their subsidiaries and/or other affiliates of DBSVUSA have received compensation, within the past

12 months for investment banking services from PT Timah as of 31 Jan 2018.

4. DBS Bank Ltd, DBS HK, DBSVS, their subsidiaries and/or other affiliates of DBSVUSA have managed or co-managed a public offering of

securities for PT Timah in the past 12 months, as of 31 Jan 2018.

5. DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a

manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further

information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document

should contact DBSVUSA exclusively.

Disclosure of previous investment recommendation produced:

6. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other

investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12

months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by

DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates in the preceding 12 months.

RESTRICTIONS ON DISTRIBUTION

1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst.

2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.

Flash Note

General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or

located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be

contrary to law or regulation.

Australia This report is being distributed in Australia by DBS Bank Ltd. (“DBS”) or DBS Vickers Securities (Singapore) Pte Ltd

(“DBSVS”). DBS holds Australian Financial Services Licence no. 475946.

DBSVS is exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001

(“CA”) in respect of financial services provided to the recipients. DBSVS is regulated by the Monetary Authority of Singapore

under the laws of Singapore, which differ from Australian laws.

Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

Hong Kong This report has been prepared by a person(s) who is not licensed by the Hong Kong Securities and Futures Commission to

carry on the regulated activity of advising on securities in Hong Kong pursuant to the Securities and Futures Ordinance

(Chapter 571 of the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to DBS Vickers

Hong Kong Limited, a licensed corporation licensed by the Hong Kong Securities and Futures Commission to carry on the

regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of

Hong Kong).

For any query regarding the materials herein, please contact Paul Yong (CE. No. ASE988) at [email protected].

Indonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia.

Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from

ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this

report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised

that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected

and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any

of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek

to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also

have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and

other services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR

Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No.

198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the

Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign

entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial

Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert

Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons

only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from,

or in connection with the report.

Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd.

United

Kingdom

This report is produced by DBS Bank Ltd which is regulated by the Monetary Authority of Singapore.

This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd, ("DBSVUK"). DBSVUK is authorised

and regulated by the Financial Conduct Authority in the United Kingdom.

In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and

associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any

form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at

persons having professional experience in matters relating to investments. Any investment activity following from this

communication will only be engaged in with such persons. Persons who do not have professional experience in matters

relating to investments should not rely on this communication.

Flash Note

Dubai

International

Financial

Centre

This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at PO Box 506538, 3rd Floor,

Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank

Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for

professional clients (as defined in the DFSA rulebook) and no other person may act upon it.

United Arab

Emirates

This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as defined

in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes

only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell

any financial product. It does not constitute a personal recommendation or take into account the particular investment

objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment

adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the

information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This

report or any portion thereof may not be reprinted, sold or redistributed without our written consent.

United States This report was prepared by DBS Bank Ltd. DBSVUSA did not participate in its preparation. The research analyst(s) named

on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research

analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company,

public appearances and trading securities held by a research analyst. This report is being distributed in the United States by

DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional

Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may

authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should

contact DBSVUSA directly and not its affiliate.

Other

jurisdictions

In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified,

professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

DBS Regional Research Offices

HONG KONG DBS Vickers (Hong Kong) Ltd Contact: Paul Yong 18th Floor Man Yee Building 68 Des Voeux Road Central Central, Hong Kong Tel: 65 6878 8888 Fax: 65 65353 418 e-mail: [email protected] Participant of the Stock Exchange of Hong Kong

MALAYSIA AllianceDBS Research Sdn Bhd Contact: Wong Ming Tek (128540 U) 19th Floor, Menara Multi-Purpose, Capital Square, 8 Jalan Munshi Abdullah 50100 Kuala Lumpur, Malaysia. Tel.: 603 2604 3333 Fax: 603 2604 3921 e-mail: [email protected]

SINGAPORE DBS Bank Ltd Contact: Janice Chua 12 Marina Boulevard, Marina Bay Financial Centre Tower 3 Singapore 018982 Tel: 65 6878 8888 Fax: 65 65353 418 e-mail: [email protected] Company Regn. No. 196800306E

INDONESIA PT DBS Vickers Sekuritas (Indonesia) Contact: Maynard Priajaya Arif DBS Bank Tower Ciputra World 1, 32/F Jl. Prof. Dr. Satrio Kav. 3-5 Jakarta 12940, Indonesia Tel: 62 21 3003 4900 Fax: 6221 3003 4943 e-mail: [email protected]

THAILAND DBS Vickers Securities (Thailand) Co Ltd Contact: Chanpen Sirithanarattanakul 989 Siam Piwat Tower Building, 9th, 14th-15th Floor Rama 1 Road, Pathumwan, Bangkok Thailand 10330 Tel. 66 2 857 7831 Fax: 66 2 658 1269 e-mail: [email protected] Company Regn. No 0105539127012 Securities and Exchange Commission, Thailand

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