Trading Chinese stocks with the China ETF's

Think U.S. securities are tough to trade, try Chinese securities, but the iShares FTSE/Xinhua China 25 Index (ETF) (NYSE:FXI) has increased 20% in the last month, time to go long China?

China's economy and incredible growth is finally slowing and with their stock market beat up beyond belief, now is the time to consider the ETF's that trade on their economy.

Long China - iShares FTSE/Xinhua China 25 Index (ETF) (Public, NYSE:FXI) 
Shares FTSE/Xinhua China 25 Index Fund (the Fund) seeks investment results that correspond generally to the price and yield performance of the FTSE/Xinhua China 25 Index (the Index). The Index is designed to represent the performance of the largest companies in the Chinese equity market that are available to international investors. The Index consists of 25 of the largest and most liquid Chinese companies. Securities in the Index are weighted based on the total market value of their shares, so that securities with higher total market values generally have a higher representation in the Index.

The FXI is trading at $26 a share, it has a 52-week low of $19, and did a 3:1 split back in the summer.  The ETF has moved up 20% in the last month.

Short China - ProShares UltraSh FTSE/Xinhua China 25 (Public, NYSE:FXP)
ProShares UltraShort FTSE/Xinhua China 25 (the Fund) seeks daily investment results that correspond to twice the inverse daily performance of the FTSE/Xinhua China 25 Index (the Index). The Index consists of 25 of the largest and most liquid Chinese stocks listed on the Hong Kong Stock Exchange. This free float-adjusted index caps the weight of any of constituent stock at 10% to ensure broad representation of the Chinese economy. The Fund takes positions in securities and/or financial instruments that, in combination, should have similar daily return characteristics as –200% of the daily return of the Index.

The FXP was trading at $183 last month and has since fallen all the way to current levels at $56 a share for an incredible 70% drop.

China is still headed for hard times, but the cashing in from shorting China may be nearing an end. 

Today, China’s central bank cut interest rates by more than a full percentage point on Wednesday, its largest rate reduction since the Asian financial crisis a decade ago and the latest sign of worries in Beijing about the slowing of the Chinese economy.

The rate cut came the day after a violent protest by hundreds of jobless workers who attacked police vehicles near Hong Kong, and five days after top Chinese officials warned in Beijing that the economy was still deteriorating and that dissent and threats to social stability would be crushed.

The Chinese Communist Party has based its legitimacy to a considerable extent in recent years on its ability to deliver strong economic growth. As a result, the party has watched with alarm as growth has slowed sharply, mainly because of a deceleration in exports and a downturn in the real estate market.