ETF hints some still bet on nuclear industry

[miningmx.com] — AN increase in the shares outstanding of a uranium exchange-traded fund suggests some still see a bright future for a nuclear industry thrown into disarray by the crisis at Japan’s quake-crippled plant.

About 500,000 new shares in Global X Uranium have been created last week, even as the share price of the ETF plunged about 25% since the nuclear complex at Fukushima was ravaged by last week’s massive earthquake and tsunami.

“In terms of the number of shares outstanding, it’s been increasing rapidly, which is to say at least to us, somewhat surprising,” said Bruno del Ama, chief executive of Global X Management Co, manager and adviser to the Global X ETF funds.

“There has to be a lot of people selling, but a lot of new people and new investors coming in,” del Ama said late Thursday.

China, and to a lesser extent India, are not expected to abandon their aggressive near-term nuclear build-out plans, which should lend support to uranium prices and uranium-related equities, consultants Eurasia Group said on Thursday.

Japan accounts for around 12% of global uranium demand. The run-up in uranium prices over the past six months to nearly $75 a tonne in January was primarily due to Chinese demand.

Volume in Global X’s uranium ETF shot up this week to about nine times the daily volume of about 400,000 shares since the fund was launched in early November.

A record 3.86 million shares were traded on Tuesday, but the fund’s net asset value slipped to $150.4m as of Thursday, down from $217.3m at the end of February.

The fund’s shares rose 9% on Friday to $14.82 in early afternoon in heavy trade of about 1.7 million shares.

Del Ama said the uranium ETF has attracted hedge funds, sovereign wealth funds, institutional and retail investors.

Japan’s worst humanitarian crisis since World War Two looked far from over after a 9.0 magnitude earthquake and 10-metre tsunami flattened coastal cities and killed thousands in the world’s worst nuclear crisis since Chernobyl.