Bullish Sentiment Pushes India ETF Higher While China Lags

Two the the largest global economies are heading in opposite directions. Economic growth tailwinds have bulls firmly behind India, while bears continue to pounce on China’s struggles.

The latter’s economic doldrums have been well-documented, particularly the fallout from its lagging real estate sector. China’s government has been doing what it can from a stimulus standpoint to inject life back into the economy. But it may take longer than anticipated. In the meantime, India is going in the opposite direction.

“India’s economy is booming. Stock prices are through the roof, among the best performing in the world,” the New York Times reported. “The government’s investment in airports, bridges and roads, and clean-energy infrastructure is visible almost everywhere. India’s total output, or gross domestic product, is expected to increase 6 percent this year — faster than the United States or China.”

The article noted that long-term capital investment in India is not where it should be. But regarding short-term moves, traders should consider India-related equities in the emerging markets space. As for China, this offers traders bearish plays, which can open opportunities for inverse ETFs.

2 ETFs in Play

To continue playing upside in India, traders can use the Direxion Daily MSCI India Bull 2x ETF (INDL). It seeks daily investment results that are equal to 200% of the performance of the MSCI India Index. That index measures the performance of the large- and mid-cap segments of India’s equity market. It covers approximately 85% of companies in India’s equity universe. INDL is up over 8% within the past month.

As for China, if investor sentiment continues its bearish tone, traders can use the Direxion Daily FTSE China Bear 3X Shares (YANG). The fund seeks daily investment results equal to 300% of the inverse of the daily performance of the FTSE China 50 Index. It has risen almost 60% within the past year.

The primary market indexes for China are off and running in the first week of trading in 2024. It remains to be seen whether China’s government will continue to allocate stimulus dollars to jump-start its economy. But until then, bears will continue circling around China stocks for opportunities.

“The CSI 300 index of the largest companies listed in Shanghai or Shenzhen fell 1.3% on the first trading day of the new year,” the Wall Street Journal reported. “Hong Kong’s Hang Seng Index—which is loaded with Chinese stocks—fell 1.5%.”

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