YINN and YANG: ETFs for Both Sides of the China Trade

ETF traders looking for an inverse angle on China funds have been having some success with the Daily FTSE China Bear 3X Shares (YANG). The fund is up 5% the past month, but are the bulls ready to start galloping to the upside again?

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”).

YANG Chart

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.

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.

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; and
  • Stay agile with liquidity to trade through rapidly changing markets.

Bulls Chomping at the Bit

China’s big tech companies have been in the hot seat from the country’s government as they look to curb monopolies in their quest to become technology independent.

“On March 12, China’s top antitrust regulator said it had issued fines to 12 Chinese companies over 10 investment deals in the internet sector that were in violation of the Anti-Monopoly Law,” a Technode article mentioned. “The State Administration for Market Regulation (SAMR) disclosed the 20 companies that were involved in those deals.”

“Nearly all of the companies mentioned were Chinese companies considered ‘big tech,’ or their subsidiaries,” the article added.

Overall, big tech has retreated as of late even in the U.S., but the bulls might be chomping at the bit with earnings season around the corner. If Chinese big tech can escape government scrutiny relatively unscathed and feel the tailwinds of a solid Q1 in 2021 from U.S. big tech, the bulls could be ready to run again.

Look for opportunities in the Direxion Daily FTSE China Bull 3X ETF (YINN) and the Direxion Daily CSI China Internet Bull 2X Shares (CWEB).

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