Playing The UltraShort China ETF (FXP) On Marc Faber’s Outlook On China

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May 16, 2010 9:13pm NYSE:FXP

We’ve been following the Chinese stock market closely, because over the last few years it’s been a “canary in the coal mine” for US equities.  The fact that the Shanghai index actually peaked last


 August, and is now in the process of rolling over, should be a concern to anyone who is long US stocks.  

China US Stock Price Chart   

Follow the leader: China has been a step or two ahead of US equities over the past 5 years – for better or for worse! Guru Marc Faber is worried as well – he recently told Bloomberg that China’s economy will slow and possibly “crash” within a year:  

“The market is telling you that something is not quite right,” Faber, the publisher of the Gloom, Boom & Doom report, said in a Bloomberg Television interview in Hong Kong today. “The Chinese economy is going to slow down regardless. It is more likely that we will even have a crash sometime in the next nine to 12 months.”   

Here’s Faber’s full interview with Bloomberg – he’s got some great quotes, including that he believes “eventually all governments in the Western world will eventually need to be bailed out!”

 

If you’re interested in making a short play on Chinese equities, you may want to check out ticker (NYSE:FXP), which is a double-short ETF on Chinese shares. A long position in (NYSE:FXP) would make you money – potentially a lot – if Chinese shares continue to roll over.  

 Written By Brett Owens From Contrary Investing      


      

Here are some details on the ProShares UltraShort FTSE/Xinhua China (NYSE:FXP) below:      

ProShares UltraShort FTSE/Xinhua China (NYSE:FXP)      

The investment seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the FTSE/Xinhua China 25 index. The fund normally invests at least 80% of assets in financial instruments with economic characteristics that should be inverse to those of the index. It may employ leveraged investment techniques in seeking its investment objective. The fund is nondiversified.      

Chart forProShares UltraShort FTSE/Xinhua China (FXP)


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