Did You Make Money from Falling Chinese Stocks?

I didn’t.

I made a few bucks when Chinese stocks were the hottest on the street, but not lately. As a matter of fact, not just that I didn’t make any money from my investments in Chinese stocks, my brokerage account has been hit pretty hard since last November after some once high flying Chinese stocks fell like a rock :(

There is, however, a way of making money when many people are abandoning Chinese stocks, as long as you own the right ETF, ProShares’ Ultrashort FTSE/Xinhua China 25 (FXP), at the right time. FXP was launched in early November, shortly after Hong Kong’s Hang Seng Index (^HSI) reaching its all-time high of 31,638. Since then, the index has been in a freefall, losing nearly a third of its value in less than three months to close at 21,757 on January 22nd. And many Chinese ADRs, which are also listed in Hong Kong Stock Exchange, suffered huge losses during the same period of time. That set the stage for FXP to prosper because, as it was designed, FXP should gain about twice as much as any decline in the FTSE/Xinhua China 25 Index on any given day when the index drops.

So how has FXP been doing since its inception?


Quite well so far, I have to say, especially since the new year comparing to the turns of FXI and PGJ, two leading China ETFs.

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3 Responses to “Did You Make Money from Falling Chinese Stocks?”

  1. aa |  Jan 24, 2008 at 4:14 pm

    Bear funds/ETFs are alternatives. But you certainly don’t wanna buy them before the market tops again with a dead cat bounce…