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How can we, as North Americans, profit from China's demise? Is there a Chinese index that I can short? Because it sure as shit not going to go back up, not afte

How can we, as North Americans, profit from China's demise? Is there a Chinese index that I can short? Because it sure as shit not going to go back up, not after the recent announcement of buying up bad chinese stocks.

deleted 11y ago
[deleted]
etrain 11y ago
There are a handful of Chinese index ETFs out there - FXI is the biggest one - but there are others you can probably short like the MCHI or the GXC. If you really like to gamble you can buy puts on some of the bigger ones.
- curiousjorge 11y ago
  Long puts on FXI, but I bet the premium is really high now because of the expectation China is going to tank in a very short period of time (-20% of their annual GDP in 3 weeks). The unexpected event would be a major rally.
vegabook 11y ago
Just sell some aussie dollar or for the brave, buy USDZAR. Much more liquid than the stocks, and exposed to all the second order factors which are already priced into stocks but not yet into the the implications for currencies: lower commoditiy prices, structurally lower demand for Australia's output, less Asian capital investing in the country. The ZAR angle gives you exposure to a possible slowdown in the huge Chinese investment in Africa, plus the dire politics in SA. The downside is people are already short the unit.
- curiousjorge 11y ago
  I also thought about shorting Canadian banks, especially Vancouver, the joke is that there's not many corporations traded on stock exchange, but I feel like the Chinese economy crashing would send ripples here where Chinese money is keeping BC afloat, especially when the real estate bubble here pops, we will see vast majority of homeowners using debt to make payments default.
  - vegabook 11y ago
    Yep decent strategy I would think. The idea is to find the second order implications which are not yet priced in. The first order "China is slowing down" is already in the price of the pureplay indices, and as you point out above, the implied downside vol is now much higher than the upside as a result.
    - 7Figures2Commas 11y ago
      Playing the collateral damage is always a wise strategy to consider, but it's also worth considering the possibility that the decline has a lot further to go. In hindsight, prices today might look like ideal entries for short positions months from now if this is just the beginning of a major decline. In markets like this, no action should be taken without a thorough fundamental and technical analysis. Making an ill-researched assumption one way or the other will cause a lot of people on both sides of the market to lose money.
      - vegabook 11y ago
        Both sides cannot lose money simultaneously, by construction of the financial markets. +1 - 1 will always equal zero. Not -2. If your point is that "it always goes back to the fundamentals" and therefore fundamentally-driven investors will always win in the long run, I put to you that there is so much accumulated capital over centuries in Europe, that the ECB can wield this to fight the fundamentals for far longer than you can stay solvent. Consequently: When we're in a regime-shift scenario, as now, fast decision making is a much better value-adding skill than weeks of fundamental analysis which can be swept aside at the whim of a policy maker. Therefore I completely disagree with you. Those who are currently holding on to fundamental analysis are losing money hand over fist in a market which values connections and reading of policy maker tea leaves. I give you as evidence, the EURUSD exchange rate. Here is the most liquid series on earth, and one which is barely moving on fundamentals, namely the existential crisis which the euro itself is facing. It is manipulated and no amount of conscientous fundamental analysis will help. Instead fundamentals will just bog you down in irrelevant detail and a false identification of the drivers. Techs, positioning, and fast moving gut feel is what matters in this market. Basically: there is no definitive winning formula in finance. You have to use your instinct and flit between strategies as the state of the world requires. Sometimes that's fundamentals. Right now it isn't.
drcode 11y ago
The flip side of this is whether "rich people" outside of China already currently have vehicles available to get exposure to Chinese stocks. I hope the answer is "No" so that we don't all of a sudden hear that Morgan Stanley et al had exposure to the Chinese market using some exotic investment vehicle and we suddenly find out there is financial contagion outside of Chinese borders.
- Mikeb85 11y ago
  Of course they did. I trade in China myself, and I'm a 'retail' investor (thankfully I got my money out awhile back, the valuations got silly so I just took profits). Every major bank from every country has a trading presence in Hong Kong at the very least, and many trade in Shanghai too. If it makes you feel better, the smart money is already out, that's what triggered the crash in the first place. Now everyone who took out margin is trying to get out, and eventually the market will level out. Probably much sooner than people expect.
jrehor 11y ago
Futures on FTSE China A50 index trade on Singapore Excbange and are available to US investors via Interactive Brokers (ticker XINA50). They are quite liquid. Have fun!
jonnycat 11y ago
If you had the stomach for such a thing, you might want to look at YANG, a 3x leveraged bearish China ETF, which is up about 30% over the past 3-4 days. Careful though - it will move just as quickly back down if the Chinese market recovers at all. I think the quote "markets can remain irrational longer than you can remain solvent" may apply here...
- curiousjorge 11y ago
  what the...why is it up? this ETF is bonkers, it's actually been trending downwards for the past 3 years. amen to that quote...this one is a little too hot for me, might stick to the other ETFs mentioned below.
  - dennisgorelik 11y ago
    If you do not understand why 3x inverse ETF trends down over years -- do NOT short anything, because you are going to loose (due to not sufficient acumen in trading). Do NOT day trade either (for the same reason).
Mikeb85 11y ago
> Because it sure as shit not going to go back up Of course it will. It's not even down on the year. It's profit taking which triggered a whole bunch of stop-losses, margin calls and panic selling. Wait for the volatility to die down, and buy H-shares (or A-shares if you have the stomach). To understand why it's going down so fast, you need to understand how fast it went up. As it stands today, the SSE is still up almost 100% in the last 12 months...

deleted 11y ago

[deleted]

etrain 11y ago

There are a handful of Chinese index ETFs out there - FXI is the biggest one - but there are others you can probably short like the MCHI or the GXC. If you really like to gamble you can buy puts on some of the bigger ones.

curiousjorge 11y ago
Long puts on FXI, but I bet the premium is really high now because of the expectation China is going to tank in a very short period of time (-20% of their annual GDP in 3 weeks). The unexpected event would be a major rally.

vegabook 11y ago

Just sell some aussie dollar or for the brave, buy USDZAR. Much more liquid than the stocks, and exposed to all the second order factors which are already priced into stocks but not yet into the the implications for currencies: lower commoditiy prices, structurally lower demand for Australia's output, less Asian capital investing in the country. The ZAR angle gives you exposure to a possible slowdown in the huge Chinese investment in Africa, plus the dire politics in SA. The downside is people are already short the unit.

curiousjorge 11y ago
I also thought about shorting Canadian banks, especially Vancouver, the joke is that there's not many corporations traded on stock exchange, but I feel like the Chinese economy crashing would send ripples here where Chinese money is keeping BC afloat, especially when the real estate bubble here pops, we will see vast majority of homeowners using debt to make payments default.
- vegabook 11y ago
  Yep decent strategy I would think. The idea is to find the second order implications which are not yet priced in. The first order "China is slowing down" is already in the price of the pureplay indices, and as you point out above, the implied downside vol is now much higher than the upside as a result.
  - 7Figures2Commas 11y ago
    Playing the collateral damage is always a wise strategy to consider, but it's also worth considering the possibility that the decline has a lot further to go. In hindsight, prices today might look like ideal entries for short positions months from now if this is just the beginning of a major decline. In markets like this, no action should be taken without a thorough fundamental and technical analysis. Making an ill-researched assumption one way or the other will cause a lot of people on both sides of the market to lose money.
    - vegabook 11y ago
      Both sides cannot lose money simultaneously, by construction of the financial markets. +1 - 1 will always equal zero. Not -2. If your point is that "it always goes back to the fundamentals" and therefore fundamentally-driven investors will always win in the long run, I put to you that there is so much accumulated capital over centuries in Europe, that the ECB can wield this to fight the fundamentals for far longer than you can stay solvent. Consequently: When we're in a regime-shift scenario, as now, fast decision making is a much better value-adding skill than weeks of fundamental analysis which can be swept aside at the whim of a policy maker. Therefore I completely disagree with you. Those who are currently holding on to fundamental analysis are losing money hand over fist in a market which values connections and reading of policy maker tea leaves. I give you as evidence, the EURUSD exchange rate. Here is the most liquid series on earth, and one which is barely moving on fundamentals, namely the existential crisis which the euro itself is facing. It is manipulated and no amount of conscientous fundamental analysis will help. Instead fundamentals will just bog you down in irrelevant detail and a false identification of the drivers. Techs, positioning, and fast moving gut feel is what matters in this market. Basically: there is no definitive winning formula in finance. You have to use your instinct and flit between strategies as the state of the world requires. Sometimes that's fundamentals. Right now it isn't.

drcode 11y ago

The flip side of this is whether "rich people" outside of China already currently have vehicles available to get exposure to Chinese stocks. I hope the answer is "No" so that we don't all of a sudden hear that Morgan Stanley et al had exposure to the Chinese market using some exotic investment vehicle and we suddenly find out there is financial contagion outside of Chinese borders.

Mikeb85 11y ago
Of course they did. I trade in China myself, and I'm a 'retail' investor (thankfully I got my money out awhile back, the valuations got silly so I just took profits). Every major bank from every country has a trading presence in Hong Kong at the very least, and many trade in Shanghai too. If it makes you feel better, the smart money is already out, that's what triggered the crash in the first place. Now everyone who took out margin is trying to get out, and eventually the market will level out. Probably much sooner than people expect.

jrehor 11y ago

Futures on FTSE China A50 index trade on Singapore Excbange and are available to US investors via Interactive Brokers (ticker XINA50). They are quite liquid. Have fun!

jonnycat 11y ago

If you had the stomach for such a thing, you might want to look at YANG, a 3x leveraged bearish China ETF, which is up about 30% over the past 3-4 days. Careful though - it will move just as quickly back down if the Chinese market recovers at all. I think the quote "markets can remain irrational longer than you can remain solvent" may apply here...

curiousjorge 11y ago
what the...why is it up? this ETF is bonkers, it's actually been trending downwards for the past 3 years. amen to that quote...this one is a little too hot for me, might stick to the other ETFs mentioned below.
- dennisgorelik 11y ago
  If you do not understand why 3x inverse ETF trends down over years -- do NOT short anything, because you are going to loose (due to not sufficient acumen in trading). Do NOT day trade either (for the same reason).

Mikeb85 11y ago

> Because it sure as shit not going to go back up Of course it will. It's not even down on the year. It's profit taking which triggered a whole bunch of stop-losses, margin calls and panic selling. Wait for the volatility to die down, and buy H-shares (or A-shares if you have the stomach). To understand why it's going down so fast, you need to understand how fast it went up. As it stands today, the SSE is still up almost 100% in the last 12 months...