Shares in China have been falling alongside U.S. stocks and related exchange traded funds (ETFs) have also been victim to this.

iShares FTSE/Xinhua China 25 Index Fund (FXI) is down 14.9% over the last three months, after a strong period for Chinese equities overall in 2007. However, even after the decline, FXI is still 200% or more above its levels two years ago.

Frederic Ruffy of Optionetics for Inside Futures says that although the long-term looks bullish, short-term outlooks aren’t fruitful.

Further weakness in global equities may be the trend as there is a correlation between many global markets along with the U.S. equity markets. Over the last 90 days, FXI has correlated 72% with the PowerShares Trust Series (QQQQ).

ProShares Ultra Short/Xinhua China 25 Fund (FXP) allows investors to catch the upside to the downside. Bullish or bearish – you have options.

Tags: Asia, China, Emerging Markets, FXI