President-elect Joe Biden certainly has bullish forex traders jumping for joy if movements in the Chinese yuan are any indication of their elation. The hope is that Biden’s administrative stance on China won’t be as staunch compared to current U.S. president Donald Trump, which could move the Direxion Daily FTSE China Bull 3X ETF (NYSEArca: YINN).
Furthermore, China has ambitious goals with its five-year plan for more self-reliance. As the second largest economy looks to divest itself from relying on other nations such as technology, it can only help YINN’s cause.
As for the fund itself, YINN seeks daily investment results, before fees and expenses, of 300% of the daily performance of the FTSE China 50 Index. The fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements, and securities of the index, exchange-traded funds (“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 Stock Exchange of Hong Kong–liquidity, of course, is what traders like to see. To summarize its benefits, YINN 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; and
- Stay agile with liquidity to trade through rapidly changing markets
Will “Dual Circulation” Triple YINN’s Gains?
One interesting aspect of China’s plan for self reliance within a five-year timeframe is the concept of dual circulation. The goal of dual circulation is to welcome foreign investment, but to simultaneously develop its own economic infrastructure.
Per a US-China Relations article, “China’s new economic strategy, called ‘dual circulation’, would see the country remain open to foreign investments and trade, while pivoting to build an internal economic ecosystem less prone to external sanctions and turbulence.” Whether China can achieve this goal or not is another story, but there’s an ETF if the second largest economy is unable to deliver.
For the self-styled bears, there’s the Direxion Daily FTSE China Bear 3X Shares (YANG). YANG seeks daily investment results, before fees and expenses, of 300% of the inverse (or opposite) of the daily performance of the FTSE China 50 Index.
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