China is facing economic headwinds, particularly related to rising COVID-19 cases, which has seen the Daily FTSE China Bear 3X Shares (YANG) jump almost 12% within the past month.
With China being the second-largest economy, the ramifications on its economy can have global effects. The spillover effect can disrupt not only neighboring countries, but those that rely heavily on China.
“China’s lockdowns of big cities to fight coronavirus outbreaks are prompting concern about more disruptions to global industries after two makers of processor chips said their factories were affected,” a NPR article reports. “That has added to unease about the omicron variant’s global economic impact. Analysts warn Vietnam, Thailand and other countries important to manufacturing chains might impose anti-disease measures that would delay deliveries.”
Japanese financial holdings company Nomura is already issuing warnings on the fragility of China’s economy as it battles rising COVID cases in its biggest cities. China’s economy was already reeling from the real estate development troubles spurred by the Evergrande crisis in 2021.
Traders sensing more bearishness in China can amplify their gains using YANG. Given the economic challenges China faced in 2021, it’s no surprise that YANG was up 26% to end the year.
Triple the Bearishness
YANG seeks daily investment results equal to 300% 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”).
The fund, under normal circumstances, invests at least 80% of its net assets in financial instruments such as swap agreements, securities of the index, ETFs that track the index, and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index.
As far as the index is concerned, it consists of the 50 largest and most liquid public Chinese companies currently trading on the SEKH.
To summarize its benefits, YANG gives traders the ability to:
- Magnify short-term perspective with daily 3X leverage.
- Go where there’s opportunity, with bull and bear funds for both sides of the trade.
- Stay agile with liquidity to trade through rapidly changing markets.
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