Chinese stocks are making their presence felt in this year's emerging markets rally. For example, the largest China exchange
traded fund listed in the U.S. is up more than 10 percent year-to-date. Resurgent Chinese stocks are creating
opportunities in leveraged China ETFs for risk-tolerant, tactical traders.
Traders looking to bet on more near-term upside for big-name Chinese stocks trading in Hong Kong, also known as H-shares, can
consider the Direxion Daily FTSE China Bull 3X Shares (NYSE: YINN). YINN attempts to deliver triple the daily returns of the FTSE China 50
Index.
As the name of that index implies, it is a narrow gauge of Chinese equities. An intraday dalliance with YINN, the recommended
way of using this is essentially a short-term position in Chinese banks. YINN's underlying index allocates about half its weight to
financial services stocks, more than triple its second-largest sector weight, which is energy.
Traders considering a leveraged ETF like YINN would do well to monitor news flow out of Washington, D.C. and Beijing as
President Donald Trump attempts to bolster U.S. ties with China without stepping on too many toes.
“Several months later, and following an April meeting with Chinese President Xi Jinping, President Trump has reversed his
stances. He admitted that China is not a currency manipulator and has not yet used his executive power to increase tariffs on
Chinese goods,” said Direxion in a recent
note. “China’s Renminbi has rallied through much of 2017 off of extremely positive trade data. In that same time, the strength
of the dollar has waned slightly and U.S. markets have cooled off from the post-election rally, especially once Trump himself said
that 'the dollar is too strong' after meeting with Xi. All of this has bolstered the China 50 Index by more than 10 percent since
January.”
Over the past month, YINN has averaged daily inflows of nearly $731,000, according to Direxion data. With Chinese Internet
stocks surging, traders may also want to have a look at the Direxion Daily CSI China Internet Index Bull 2X Shares (NYSE:
CWEB). CWEB, which is double- not triple-leveraged, is the
first leveraged play on Chinese Internet stocks.
CWEB seeks to deliver double the daily performance of the CSI Overseas China Internet Index. Over the past 30 days, daily
inflows to CWEB are north of $70,000, according to issuer data.
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