Economic Data Intensifies Bullish Tailwinds for China ETF

The latest economic data could mean China’s efforts to reinvigorate its economy could be working. That’s adding optimism for short- and long-term investors. For the former, this could feed into future strength for the Direxion Daily FTSE China Bull 3X ETF (YINN).

The MSCI China index is starting to trend higher. That’s potentially revealing the early goings of an uptrend. But it’s still down about 2% for the year. Likewise, YINN was down over 30% to start the year. But it’s corroborating with the MSCI China index, as it also heads higher.

YINN tracks the FTSE China 50 Index (TXIN0UNU). This index consists of the 50 largest and most liquid public China companies currently trading on the Hong Kong Stock Exchange as determined by FTSE/Russell. With the additional 300% leverage, China investors can maximize profit potential on their bullish inclinations.

^MSCN Chart

^MSCN data by YCharts

China’s Manufacturing Picks Up

Whether the MSCI China index and YINN continue their upward trajectory will heavily depend on more positive information coming out of China. As mentioned, the latest economic data from the country could be showing early signs of improvement. More specifically, factory activity rose during the month of March.

“China’s factory activity beat expectations in March, boosting optimism about the country’s ability to achieve its ambitious growth goal of around 5% this year,” Bloomberg reported recently. The report noted the “Caixin manufacturing purchasing managers’ index rose to 51.1 on Monday (April 1).”

Bloomberg also noted a reading of above 50 reveals expansion. The index achieved growth for a fifth straight month. That makes it the longest expansion streak in over two years.

“Overall, the manufacturing sector continued to improve in March, with expansion in supply and demand accelerating, and overseas demand picking up,” Wang Zhe, a senior economist at Caixin Insight Group, said in a CNBC report.

While it’s certainly welcome news, many market experts think there’s a long way to go to solidify a truly bullish sentiment. As mentioned by Bloomberg, China has been reeling from a property development crisis for the past few years, and more robust stimulus measures may be necessary.

For traders who like the prospect of overall emerging markets gaining strength, but are still wary of broad-based exposure that includes China, they can consider the Direxion Daily MSCI Emerging Markets ex China Bull 2X Shares (XXCH). The fund offers twice the daily performance of the MSCI Emerging Markets ex China Index.

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