Market Overview

A-Shares ETF Tries To End 2015 In The Holiday Spirit

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It has been a wild year for the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (NYSE: ASHR) and the other exchange traded funds tracking Chinese A-shares. These soared through the first few months of the year with several dotting lists of 2015's best-performing ETFs in the early part of the year.

As A-shares tumbled, investors have endured situations such as days where half the stocks trading on the mainland where halted by Chinese regulators and ineffective market interventions, a tool Beijing has since told market participants that they should not become too dependent on.

For wary investors, the good news is that A-shares and ASHR are scrambling to end 2015 on a positive noting and doing an admirable job of that. Importantly, ASHR's recent bullishness (the largest A-shares ETF trading in New York is up almost seven percent over the past week) is chasing previously eager short sellers away.

"Short interest in the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF has fallen to about 27 percent of outstanding shares from a record 38 percent two weeks ago, according to data compiled by Bloomberg and Markit. Shares in the fund jumped 1.3 percent to $29.76 in New York Tuesday, extending the gain to 27 percent from this year’s low in August," according to Bloomberg.

Although some traders have opted to short ASHR directly, plenty of have embraced the Direxion Daily CSI 300 China A Share Bear 1X Shares (NYSE: CHAD). CHAD, which is designed to deliver the daily inverse performance of the CSI 300 Index on a percentage-for-percentage basis, debuted in mid-June, just before Chinese stocks started tumbling. That fortuitous timing helped make CHAD, at least for several months, one of this year's most popular new ETFs.

However, the recent upside for ASHR could prompt risk-tolerant traders to examine CHAD's bullish cousin, the Direxion Daily CSI 300 China A Share Bull 2X Shares (NYSE: CHAU). CHAU is designed to deliver double the daily performance of the CSI 300 Index, the same benchmark ASHR tracks. As of Dec. 22, CHAU was up more than 16 percent this month, making it the best-performing leveraged bullish ETF in Direxion's lineup on a month-to-date basis.

CHAU's volume has tailed off modestly in recent sessions and the ETF has lost some assets over the past month, according to Direxion data.

ASHR heads into Wednesday just 4.6 percent below its 200-day moving average, which the ETF has not closed above since August.

"Bears had been piling on bets against Chinese stocks after a 25 percent rebound in the Shanghai Composite from its post-crash low. Traders pulled a net $693 million from the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF, the biggest exchange-traded fund investing in mainland equities, from June through November," according to Bloomberg.

Posted-In: Long Ideas News Short Ideas Emerging Markets Emerging Market ETFs Intraday Update Markets Trading Ideas

 

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