Amid escalating trade tensions between the U.S. and China, the world’s two largest economies, Chinese stocks and the related US-listed ETFs are slumping.
Recently, Shanghai markets have slipped into a bear market amid concerns the economy will struggle due to rising tensions with the U.S., Bloomberg reports.
China’s purchasing manager index readings for June already revealed a gauge of export orders falling, which suggested that the trade war is already impeding growth.
Risk-tolerant traders may want to consider the Direxion Daily FTSE China Bull 3X ETF (NYSEArca: YINN) and Direxion Daily FTSE China Bear 3X ETF (NYSEArca: YANG). YINN, the bullish fund, seeks to deliver triple the daily returns of the FTSE China 50 Index while YANG looks to deliver triple the daily inverse returns of that benchmark.
Related: Is Trade War the “New Normal”?
Catalysts For YINN And YANG
“Certainly one of the most visible bear targets, Chinese industry has been hit hard by the first round of tariffs on steel and aluminum exports. The most recent sell-off in Chinese equity came on the threat of investment restrictions on Chinese-owned companies into U.S. Companies. This, in addition to proposed tariffs on Chinese Electronics, aim to hit the country in its thriving tech industry,” according to Direxion.
Another byproduct of the trade wars has been its effect on emerging markets. Direxion can allow traders to also play bull or bear with its Direxion Daily MSCI Em Mkts Bull 3X ETF (NYSEArca: EDC) and Direxion Daily MSCI Em Mkts Bear 3X ETF (NYSEArca: EDZ).
“Although China is an obvious bear pick, perhaps the biggest losers from the Administration’s pervasive trade gambit are emerging market economies who are stuck in the middle,” said Direxion. “Aside from direct tariff targets like China and Mexico, other emerging market countries like South Korea, India and Taiwan are in the precarious position of having their trade relationships strained as a result of the tariffs being lobbed around them.”
The MSCI Emerging Markets Index is lower by about 8.5% year-to-date. EDZ looks to deliver triple the daily inverse returns of that index while EDC tries to deliver triple the daily returns.
For more information on the Chinese markets, visit our China category.