3 ETFs For The Latest China Mess

Stocks were roiled Friday amid speculation that President Donald Trump is considering a plan that would delist Chinese companies from major U.S. equity exchanges as part of a broader effort to limit U.S. access to Chinese investments.

Predictably, the headlines pressured a slew of U.S.-listed Chinese stocks. Shares of e-commerce giant Alibaba Group BABA slipped 5.15%, while rival JD.com JD plunged nearly 6%.

Even PetroChina PTR, the oil giant with one of the longest-running U.S. listings of any Chinese company, lost more than 0.5%. 

“The deliberations come as the U.S. looks for additional levers of influence in trade talks, which resume on Oct. 10 in Washington,” CNBC reported.

“Both countries slapped tariffs on billions of dollars worth of each other’s goods. The discussions also come as the Chinese government is taking steps to increase foreign access to its markets.”

At this point, it's speculation about whether Trump presses forward with the China delisting gambit, but if he does, the following bearish ETFs could be worth considering.

ProShares Short FTSE China 50

The ProShares Short FTSE China 50 YXI is essentially the inverse equivalent of the iShares China Large-Cap ETF FXI, one of the largest U.S.-listed China ETFs. On Friday, FXI fell 1.15%, while YXI rose by the same amount.

Since it's not a leveraged ETF, there aren't significant risks associated with holding YXI for a few days, but even if Chinese stocks fall on the delisting news, traders expecting big gains could be somewhat disappointed with YXI simply because the underlying index doesn't feature big weights to stocks like Alibaba and JD.

Chinese banks, which don't trade in the U.S., command nearly half the benchmark's weight.

Direxion Daily CSI 300 China A Share Bear 1X Shares

The Direxion Daily CSI 300 China A Share Bear 1X Shares CHAD is another inverse, though not leveraged, ETF. Friday's 1.33% jump on light volume positions the ETF to reclaim its 200-day moving average (5.11%).

The risk with CHAD, besides the possibility of a rally by Chinese stocks, is that the components in the CSI 300 Index trade on the mainland and many don't have U.S. listings — so vulnerability to U.S. delisting chatter could be limted.

Direxion Daily FTSE China Bear 3X Shares

Alright, now we're getting somewhere. The Direxion Daily FTSE China Bear 3X Shares YANG surged 3.69% on more than double the average daily volume last Friday.

YANG tries to deliver triple the daily inverse returns of the FTSE China 50 Index, the same index YXI tracks.

For traders looking for rapid gains on the China delisting headlines, YANG could be the way to go.

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