China is looking to implement stricter regulatory measures, which opens up opportunities to trade a pair of leveraged Direxion Investments ETFs.

“Tightening policies and enforcement on everything from antitrust to technology and data have investors from western countries questioning whether China’s economy can shake off its communist party roots,” a Direxion Investments The Xchange article noted.

The article also echoed the words of famed investor Ray Dalio. China’s recent moves on cracking down on two of its biggest companies, Alibaba and Tencent Holdings, set off red flags for Dalio.

“They interpret moves like these two recent ones as the Communist Party leaders showing their true anti-capitalist stripes even though the trend over the last 40 years has clearly been so strongly toward developing a market economy with capital markets,” Dalio said, looking through the lens of investors in the West.

As such, bears could be gearing up to make short moves on China. One way to do that is with an inverse ETF like the Daily FTSE China Bear 3X Shares (YANG).

YANG seeks daily investment results equal to 300 percent 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 and 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.

The index consists of the 50 largest and most liquid public Chinese companies currently trading on the SEHK. 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

The Case for the Bulls

It’s not all doom and gloom for China. Its economic fundamentals are still strong, which makes a case for bulls who want to use the Direxion Daily FTSE China Bull 3X ETF (YINN).

“As an economy, China’s outlook is quite rosy. Long term they look well-poised to become the No. 1 economy in the world within the next 10 years in terms of gross domestic product (GDP),” the Xchange article said.

For more news, information, and strategy, visit the Leveraged & Inverse Channel.