The YINN And YANG Of U.S.-China Trade Policy Creates Volatility And Opportunities
Direxion Daily FTSE China Bear 3X Shares ETF and its bullish counterpart, Direxion Daily FTSE China Bull 3X Shares ETF, offer leveraged exposure to Chinese equities amid ongoing U.S.-China trade tensions. FXI and Chinese stocks have rebounded from recent lows but remain well below key resistance, with political risk and China's business ideology still weighing on valuations. YANG and YINN are highly volatile trading tools, subject to time decay and reverse splits, requiring strict time and price stops for risk management.
YINN: Trade Jitters Make It A Risky Time To Be Levered Long China
Despite recent optimism, I am cautious on large-cap Chinese equities due to ongoing trade uncertainty and headline risks. Leveraged ETFs like YINN are generally unsuitable for long-term investors, as volatility drag and high expenses erode value over time. Chinese stocks have rallied sharply, but structural issues including debt, demographics, and trade tensions cloud the long-term outlook.
China Stocks Could Resume Rally Amid Tariff Pause
Taking into account a U.S/China trade war that may be on pause, but far from resolved, China stocks could provide traders with an opportune entry point and resume their rally. Volatility in China equities is certainly not a new phenomenon.
YINN - To Trade, Not Buy
Understanding the construction and purpose of financial instruments is crucial to avoid misusing them and potentially losing money. The Direxion Daily FTSE China Bull 3X Shares ETF (YINN) is designed for short-term trading, not long-term investment. Leveraged ETFs like YINN are suitable for speculation or hedging but suffer from performance degradation over time due to their derivative-based construction.
YINN: Bullish Amid Economic Recovery
The Chinese economy's recovery, driven by technology and new policies, positions YINN ETF for strong growth, evidenced by a 72.60% return last year. YINN offers 3x daily exposure to the FTSE China 50 index, amplifying returns but also increasing risk, making it suitable for short-term, high-risk investors. High liquidity and a competitive expense ratio enhance YINN's attractiveness, despite its lower-than-average dividend yield and high expense ratio.
YINN: Trading The China Stimulus Rally
YINN is for trading the short-term rally on expectations of new China macro stimulus, which is set to be announced next week. The underlying equity exposure (FXI) has 13% to 30% upside potential on consensus estimates and expanding multiples. YINN can multiply this by 3x or more to a potential 90% gain.
YINN: Swing-Trading Tool For The Pros
The Direxion Daily FTSE China Bull 3X Shares ETF provides 300% exposure to the daily returns of Chinese equities. YINN ETF experienced massive gains in the past few months due to the 'positive convexity' from its leveraged positions. Looking forward, I remain optimistic about Chinese equities as the Chinese government continues to implement stimulative policies.
