Time To Do Some Shopping With China ETFs?

Times have been hard lately for investors looking to profit from the China growth story. Sure, that amazing growth story which has produced the fastest growing major economy in the world is still in tact, but policymakers' fears regarding inflation have turned the China ETF lineup into a boulevard of broken dreams.

That scenario may be poised to change in the near-term for select members of the China ETF crew. It would appear that Beijing is, at the very least, a bit less worried about inflation than what we've seen in recent months. Maybe that means a more dovish view on economic growth is around the corner.

If that's the case, it will pay to be selective when shopping for bargains among China ETFs. Here are some to avoid and some to embrace.

Embrace: The Market Vectors China ETF PEK:
A new kid on the China ETF block, PEK uses derivatives instruments to track China's A-shares market and the chart is starting to look attractive. "The activity suggests that government intentions to invest in consumption-oriented industries from consumer discretionary to agriculture to auto have boosted confidence in domestic China," according to Gary Gordon of California-based Pacific Park Financial.

Avoid: The iShares FTSE China 25 Index Fund FXI:
Still the king of the China ETF world in terms of assets and volume, FXI has the potential to lag other China ETFs in a rebound scenario due to its heavy weighting to Chinese financials.

Embrace: The Guggenheim China Small Cap ETF HAO
HAO is up almost 5% in the past week and for those that are believers in China making progress toward an economy that is more domestically driven, HAO would reap the benefits if that scenario proves valid.

Avoid: The Global X China Energy ETF CHIE
Maybe not avoid outright, but at least wait for confirmation that CHIE really wants to party to the upside. The chart is starting to look a little better, but CHIE is not a pure oil play. Solar makes up a decent amount of the ETF's weight and solar is a mess right now, so wait for sentiment to improve on that sector before jumping into CHIE.

For you forex lovers out there, embrace the WisdomTree Dreyfus Chinese Yuan CYB and Market Vectors Chinese Renminbi/USD ETN CNY as plays on the Yuan perhaps becoming a reserve currency and plans by the People's Bank of China to allow cross-border trades to settle in Yuan later this year.