Economic news coming out of China will certainly add a heavy dose of volatility to its equities. That should open the door for traders to maximize their profit potential in China stocks using leveraged and inverse ETFs from Direxion.
Investors initially cheered, but then later jeered, China’s efforts to jump-start economic growth via stimulus measures. As the country continues to struggle with revitalizing growth, investors will continue to clamor for more stimulus. And that’s something only its government can address.
“No one knows how far Beijing will go to boost China’s economy,” Barron’s explained. “That is both leading to big swings in Chinese stocks and fueling concern that international companies relying on growth in the nation’s enormous market could have to ride out continued weakness for at least a couple of quarters.”
As mentioned, it’s difficult to gauge whether any stimulus measures coming out of China’s government will have a long-standing impact on the economy. What it will do, however, is cause market fluctuations that traders can take advantage of in the short-term horizon.
“We believe [Beijing] has at least extended the ‘stimulus hope’ to the NPC’s standing committee meeting,” said Patrick Pan, a strategist at Daiwa Securities Group in Hong Kong. “Although we still believe the timing is good for early investors to selectively reduce some of their China stock positions, we continue to see some tactical opportunities for ‘swing’ trades over the next two to three weeks.”
Trade the Fluctuations
With the capital markets sensitive to data coming from China, heavy market fluctuations could result for China stocks moving forward. That said, it’s best for traders to have tools that will allow them to be flexible whether China equities trend higher or lower. Direxion has a pair of leveraged/inverse ETFs that do just that.
For bullishness in China equities, consider using the Direxion Daily FTSE China Bull 3X Shares (YINN ). It seeks daily investment results equal to 300% of the performance of the FTSE China 50 Index. This gives traders exposure to the 50 largest and most liquid public China companies currently trading on the Hong Kong Stock Exchange as determined by FTSE/Russell.
If a sell-off occurs due to profit-taking, negative economic data, or other reasons, there’s the Direxion Daily FTSE China Bear 3X Shares (YANG ). It takes the opposite side of YINN, giving traders the flexibility to profit when the largest China equities trend lower.
For more news, information, and analysis, visit the Leveraged & Inverse Channel.
