While China has been struggling to reenergize its economy, the Daily FTSE China Bull 3X Shares (YINN) is still in the green with a YTD gain of about 20%. Furthermore, long-term growth skews in favor of China’s economy continuing to expand.
YINN provides 3x exposure to the FTSE China 50 Index and has risen almost 10% within the past month. That short-term pop is indicative of what could be long-term growth for the economy despite it meandering as the country continues to contend with the effects of a real estate development crisis a few years back.
China’s government has implemented stimulus measures to jump-start economic growth, and more could be on the way. In the meantime, the growth prospects for the second largest global economy are bright, and its consumers are benefitting.
“China’s large tech-savvy consumer base, bolstered by an expanding middle class and increasing disposable income, has driven substantial demand for consumer purchases ranging from tech-laden EV cars to the latest luxury products,” the Harvard Business Review noted.
Because markets are particularly sensitive to news in the short term, traders are always contending with volatility. That said, when YINN trends lower, they can take the other side, with the Daily FTSE China Bear 3X Shares (YANG), which seeks the inverse of YINN and maintains 300% exposure for maximizing gains on short-term bearishness.
Opportunity Cost of China and EVs
Certain companies domiciled in the U.S. understand the potential of China. More importantly, they understand the opportunity cost of not having some sort of multinational strategy that incorporates China in some form or fashion.
“Companies like Tesla, Cummins, Invenergy, and Ford have all adjusted a worldview shaped by decades of Western technological leadership and understood that China, for all its macro-economic challenges, has essential strengths to be capitalized,” HBR added.
On that note, China has also become a dominant force in the electric vehicles market. As reported by Reuters, half of vehicles sold in China during the month of July had some type of EV technology, whether purely EV or hybrid.
This brings to mind another potential trade that’s rife for future growth. That is the Direxion Daily Electric and Autonomous Vehicles Bull 2X Shares (EVAV). It seeks to achieve 200% of the daily performance of the Indxx US Electric and Autonomous Vehicles Index. The index provides exposure to 25 U.S.-listed companies poised to disrupt the existing transportation market.
It includes companies beyond vehicle manufacturers to paint a more holistic picture of the industry. The index includes charging station manufacturers such as ChargePoint and Blink, companies involved in software development and the manufacturing of various electrical components, and electric vehicle manufacturers such as the Tesla, Lucid, and NIO.
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