While the U.S.-China trade deal is injecting a healthy dose of optimism in the markets, the economic health of both nations is saying another thing. For China, underlying weakness in the country’s economy could be paving the way for traders to play the Daily FTSE China Bear 3X Shares (NYSEArca: YANG) ETF.

“Communist leaders are counting on consumers to power China’s economy, replacing trade and investment,” an article said in Japanese news site The Mainichi. “But shoppers, spooked by the tariff war and possible job losses, are cutting spending on cars, real estate and other big-ticket purchases.”

A bevy of economic data coming out of China supports the notion that the second largest economy could be against the ropes. As such, this opens up the pathways for bearish plays via inverse ETFs.

“Economic growth sank to a three-decade low of 6% over a year earlier in the quarter ending in September,” the article added. “That is stronger than most major countries but a strain for Chinese companies that need to repay debt. Factory activity shrank more than expected in October, according to an official trade group, the China Federation of Logistics & Purchasing. Analysts said that suggested an uptick a month earlier didn’t mark the start of a recovery.”

YANG Is One for The Bears

As for the fund itself, YANG seeks daily investment results equal to 300 percent of the inverse (or opposite) of the daily performance of the FTSE China 50 Index. The index consists of the 50 largest and most liquid public Chinese companies currently trading on the Hong Kong Stock Exchange (“SEHK”).

Inverse ETFs from Direxion offer the following benefits:

  • Magnify your short-term perspective with daily 3X leverage
  • Go where there’s opportunity, with bull and bear funds for both sides of the trade; and
  • Stay agile – with liquidity to trade through rapidly changing markets

YANG’s top 10 holdings as of 9/30/2019:

  1. China Construction Bank: 9.00%
  2. Tencent Holdings: 8.87%
  3. Ping Aa: 8.05%
  4. Industrial Commerc Bank China: 6.55%
  5. China Mobile: 5.35%
  6. Meituan Dianping: 5.11%
  7. Bank Of China: 4.45%
  8. Cnooc: 3.98%
  9. Cm Bank H: 3.17%
  10. China Life H: 3.03%

For traders who want to err on the side of bullishness, there other leveraged ETFs to play, such as the Direxion Daily FTSE China Bull 3X ETF (NYSEArca: YINN), Direxion Dly CSI 300 China A Share Br 1X ETF (NYSEArca: CHAD), Direxion Daily CSI 300 CHN A Share Bulll 2X ETF (NYSEArca: CHAU), and Direxion Daily CSI CHN Internet Bull 2X Shares (NYSEArca: CWEB).

For more relative market trends, visit ETFtrends.com.

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