Traders looking for a 2023 bounce-back play may want to consider China for opportunities. The Chinese government is looking to get the country’s economy back on track with policies that are conducive to long-term economic growth.
This comes after the economy has been hit with hard luck over the past couple of years in addition to the global effects of rising inflation. In 2021, a real estate development crisis put a dent in economic growth while the country was already reeling from a crackdown on monopolistic behavior by big tech companies.
To add to that, a resurgence in COVID-19 cases meant a return to lockdown restrictions that further choked off economic growth. Now, lockdowns are starting to ease, and the government is eager to revitalize the economy again.
“From an economic perspective, the main goals are to restore robust growth to China’s slowing economy, improve the lot of hundreds of millions of Chinese rural workers, stabilise the ailing property market and shore up a crisis afflicting the finances of scores of local governments, the officials and government advisers say,” a Financial Times report said. “Chen Zhiwu, one of several leading economists who expect Beijing to push through a series of pro-growth policies, said he expects 2023’s target will be ‘6 per cent or higher’ — much higher than the IMF’s projection of 4.4 per cent.”
“Given that they may aim for an average growth rate of 5 per cent and 2022 is likely to deliver about 3 per cent, they need to have something like 7 per cent for 2023,” said Chen, who is also a professor of finance at Hong Kong University.
Play the Potential Upside With YINN
If China’s policies can translate to economic growth, that bodes well for traders looking for bullishness in Chinese equities. As opposed to individual Chinese equities that could be ripe for the picking, traders can also opt for a broad-based exchange traded fund (ETF) — Direxion Investments also has a fund that can add leverage if traders’ bullish inclinations are strong.
All that said, if China is able to pull out of its economic doldrums with a re-opening of its economy, then traders can play the bullish card with the Direxion Daily FTSE China Bull 3X ETF (YINN). YINN tracks the FTSE China 50 Index, which consists of the 50 largest and most liquid public Chinese companies currently trading on the Hong Kong Stock Exchange.
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