ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Themes
      • Active ETF
      • Artificial Intelligence
      • Beyond Basic Beta
      • China Insights
      • Climate Insights
      • Core Strategies
      • Crypto
      • Direct Indexing
      • Disruptive Technology
      • Energy Infrastructure
      • ETF Building Blocks
      • ETF Investing
      • ETF Education
      • ETF Strategist
      • Financial Literacy
      • Fixed Income
      • Free Cash Flow
      • Innovative ETFs
      • Institutional Income Strategies
      • Leveraged & Inverse
      • Managed Futures
      • Market Insights
      • Modern Alpha
      • Multifactor
      • Responsible Investing
      • Retirement Income
      • Tax Efficient Income
    • Asset Class
      • Equity
        • U.S. Equity
        • Int'l Developed
        • Emerging Market Equities
      • Alternatives
        • Commodities
        • Gold/Silver/Critical Minerals
        • Currency
        • Volatility
      • Fixed Income
        • Investment Grade Corporates
        • US Treasuries & TIPS
        • High Yield Corporates
        • Int'l Fixed Income
    • ETF Ecosystem
    • ETFs in Canada
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Leveraged & Inverse ETF Channel
  2. Can Semiconductors Dodge Trade War Crossfire?
Leveraged & Inverse ETF Channel
Share

Can Semiconductors Dodge Trade War Crossfire?

Aaron NeuwirthOct 09, 2019
2019-10-09

The U.S.-China trade deal plays a profound role in the performance of the semiconductor sector given their exposure to China. So far, the tariff-for-tariff war between the two largest economies is putting semiconductors in the crossfire, but can the sector dodge get out their way moving forward?

“Due to their considerable exposure to the Chinese market and a heavily intertwined supply chain in Asia, semiconductor stocks have seen collateral damage as the US-China trade spat has escalated,” said a Direxion Investments “Xchange” post. “With more precise targeting technology, recent military engagements have seen unintended consequences decrease compared to what was seen even a few decades ago, but military action cannot avoid these unfortunate events and nor can a dispute played out in economic terms.

“To make matters worse, semiconductors are effectively everywhere today from computers to smartphones to televisions,” the post added. “Semis are one of the most cyclical industries as the replacement cycle for new chips is high thanks to the need for continuous reinvestment and technology innovation. Of course, like any industry, demand can also simply dry up should the buyers of semiconductors start spending less as they see less demand for end products like phones.”

When it comes to traders looking leveraged ETF opportunities, the semiconductor sector is one in which China will have a profound impact. As such, the U.S.-China trade war will continue to be closely watched as developments unfold.

Semiconductors Relative

“The semiconductor industry sits literally and figuratively between the U.S. and China as a considerable portion of high technology goods are made in China,” the “Xchange” post said. “As the conflict has escalated, so has damage across the industry. In particular, restrictions on selling to Huawei and overall slowing demand in China has been a drag on 2019 sales and 2020 guidance. The monthly performance of semiconductors relative to the broader market since the unofficial start of the trade war in early 2018 has reflected this dynamic in real-time. The worst relative performance (-10%) occurred in May when the trade war focused firmly on a new group of goods of which semiconductors play an integral role in producing; cellphones and laptops.”

For the semiconductor bears, this could put the Direxion Daily Semiconductor Bear 3X ETF (SOXS B) in play. For investors looking to play a sub sequential bounce higher in semiconductors can take advantage of the Direxion Daily Semiconductor Bull 3X ETF (SOXL B+). Other ETFs without the leverage include the VanEck Vectors Semiconductor ETF (SMH A-) and the iShares PHLX Semiconductor ETF (SOXX A-).

This article originally appeared on ETFTrends.com


Content continues below advertisement

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X