+ 2.59
+ 0.8%
+ 0.08
+ 0.03%
+ 0.35
+ 0.09%

A-Shares Move Renews Interest In This ETF

June 12, 2018 12:33 pm
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More
A-Shares Move Renews Interest In This ETF

Earlier this month, index provider MSCI Inc. (NYSE:MSCI) began the process of moving China A-shares, the stocks trading on mainland China exchanges in Shanghai and Shenzhen, to the prominent MSCI Emerging Markets Index.

The move is expected to affect several US-listed exchange traded funds (ETFs). One of the more unique options feeling some impact from the MSCI move is the Direxion Daily CSI 300 China A Share Bull 2X Shares (NYSE:CHAU).

What Happened

CHAU attempts to deliver double the daily returns of the CSI 300 Index, one of the most widely followed gauges of mainland China equities.

That index “is a modified free-float market capitalization weighted index comprised of the largest and most liquid stocks in the Chinese A-share market,” according to Direxion. “Index constituent stocks must have been listed for more than three months (unless the stock’s average daily A-share market capitalization since its initial listing ranks among the top 30 of all A-shares) and must not be experiencing obvious abnormal fluctuations or market manipulations.”

Why It's Important

MSCI is planning to over 200 A-shares stocks to the emerging markets benchmark, a theme some aggressive traders have been using CHAU to capitalize on.

Data suggest CHAU, the only leveraged A-shares ETF trading in New York, has been seeing increased activity. Over the past 30 days, CHAU is averaging daily inflows of over $366,000, according to issuer data. That is good for one of the best inflows tallies over that period among all of Direxion's bullish leveraged emerging markets ETFs.

What's Next

The A-shares making the jump to the MSCI Emerging Markets Index currently reside in an A-shares inclusion designed by MSCI, which is not the index CHAU attempts to deliver double the daily returns of. Still, that MSCI index and CHAU's underlying index feature some of the same companies.

CHAU's underlying benchmark allocates over a third of its weight to financial stocks while the industrial and consumer discretionary sectors combine for a quarter of its weight.

MSCI's inclusion will last from June through September.

Related Links:

Good Stocks On The Cheap Here.

Cheaper EM Bond Funds.

Related Articles

Wall Street Remains Bullish On China

The November rally in U.S. equities may be garnering most of the attention (especially as we get closer to having a COVID-19 vaccine) but don’t sleep on China. Among Direxion’s stable of leveraged ETFs, two of the five top-performing funds year to date provide magnified exposure to China. Here’s a breakdown of what has driven each fund higher. read more

3 Exciting China ETFs For A Hot Summer

The FTSE China 50 Index jumped 9.50% on Monday and the basic exchange traded fund tracking that index followed suit on volume that was more than double the daily average. read more

3 Leveraged Emerging Markets Traders Should Consider in Q1

Preparing For The Best And Worst With China ETFs