It is safe the Market Vectors Rare Earth/Strategic Metals ETF
) was not the first ETF traders and investors were looking to as
a way of profiting from Malaysia's election results, but there is
no denying the downtrodden fund is up nearly 2.3 percent
What might come as even bigger surprise regarding REMX, an ETF
that at the start of trading Monday was off nearly 22 percent
year-to-date, is which one of its holdings is helping boost the
fund. That honor goes to Australia-based Lynas (OTC:
At first glance, Lynas would seem like an unlikely, perhaps
albeit temporary, savior for the rare earths ETF. After all, the
shares hover around 60 cents and that is with the benefit of
today's 15.4 percent surge on volume that is already
two-and-a-half times the daily average.
Still, Lynas is loving the results of Malaysia's elections,
held over the weekend, that saw
Prime Minister Najib Razak retain power
and his ruling National Front coalition capture 127 of the
country's 222 seats in parliament.
The Lynas pop is easy to explain. The company, whose shares
were down 19 percent this year going into Monday's session, is
building the largest rare earths production facility in the world
outside of China. That $800 million facility is located in the
Malaysian city of Kuantan.
In a scenario reminiscent of what American voters see in
nearly every election, Najib favors construction of the Lynas
facility. His defeated opponent, Anwar Ibrahim, said during his
campaign he would re-visit Lynas' permit for the operation if he
according to the BBC
And as is sometimes the case with related issues in the U.S.,
Lynas has faced strong opposition from environmental groups in
Malaysia regarding its plant. That is understandable because rare
earths mining is highly toxic for the environment, something that
the Prius and Tesla owners of the world often forget.
To put into context the environmental risks of rare earths
mining, consider this: China, which controls over 90 percent of
the global rare earths export market, produces more than five
times the waste gas, including deadly fluorine and sulfur
dioxide, than the total flared by all miners and oil refiners in
according to the Arizona Daily Star
Environmental concerns aside, the $128.2 million REMX is
having a nice day for what feels like the first time in an
eternity. Lynas, a 60-cent stock that is the ETF's third-largest
holding with a weight of 6.9 percent, is the reason.
For more on Malaysia, click
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