Chinese authorities are moving swiftly to stem the freefall in the country’s financial and property markets. The country’s central bank has kept its one-year prime rate unchanged but slashed the five-year rate by 25 basis points to 3.95%. The rate cut raises hopes for further actions toward shoring up its economy.
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However, the move seems to have failed to cheer up investors. Major Chinese stocks such as Alibaba (NYSE:BABA), JD (NASDAQ:JD), and Bilibili (NASDAQ:BILI) are trending lower in the early session today. Trip.com (NASDAQ:TCOM) is also struggling to eke out gains today, even as Chinese travel demand is expected to be buoyant.
The lackluster response means further measures may be needed to improve sentiment as the world’s second-largest economy faces cooling new home sales and falling fertility rates. While the Shanghai Composite Index (SHCOMP) languishes at lows last seen in H1 2020, investors could look at two key ETFs to make the most of the changing market dynamics in China.
What Is the Best ETF for China?
First, the Direxion Daily FTSE China Bear 3X Shares ETF (YANG) can help ride any lower momentum in the broader Chinese markets. YANG has clocked gains of nearly 42% over the past year.
Second, the Direxion Daily FTSE China Bull 3X Shares ETF (YINN) can help ride any upward momentum shift in China over the coming months. YINN has gained nearly 6% over the past month. Meanwhile, Mike Burry of The Big Short fame has already been loading up on the opportunities in the Chinese equity space.
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