So far as I write this it’s been a nasty Monday morning for global equity markets as investors reacted to bad news from China and a host of other political and economic threats around the world. Against a backdrop clearly marked by flashing red screens, a few ETF headlines stand out against the gloom and doom:
China hurts you in places you didn’t know it could: There’s a good article in Barron’s on niche ETFs hit by the selloff in Chinese stocks. For example, 30% of holdings in the iShares Global Clean Energy ETF are from China while the plunging yuan is a big problem for multinationals that generate revenue in China and have to transfer sales back into U.S. dollars. Companies like Yum! Brands generates more than 50% of total sales from China. So ETFs like the EGShares Blue Chip ETF that owns developed market companies that do a lot of business with emerging markets is taking a bit—it’s down nearly 8% so far in August.
More active managers are launching ETFs: A new article in Pensions and Investments clocks the appearance of new ETFs offered by active managers in the U.S. as they seek to get a piece of the action. T. Rowe Price, Legg Mason and Goldman Sachs have all filed with the U.S. Securities and Exchange Commission to launch new ETFs—not just passive products, but active as well. New York Life and Janus have also acquired ETF shops to help launch them into the business. As the article points out, 34% of officials at pension funds, foundations and endowments use ETFs and 25% of those are planning to boost their usage.
Inverse ETFs might just have their day: Inverse ETFs, which are designed to go in the opposite direction from whatever index they track, might just be the place to be for quickly moving traders looking to profit from today’s market carnage. So why not start with China, suggests Benzinga’s Todd Shriber. The Direxion Daily CSI 300 China A Share Bear 1X Shares is the only bearish ETF listed in the United States that gives traders a bearish view on mainland Chinese stocks. CHAD is just 2 months old—but it’s surged 15.2% with the benefit of leverage. Read the full article here if you think you have the stomach to ride into the storm that is China’s stock market today.
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