The Direxion Daily FTSE China Bear 3x Shares ETF (YANG) is experiencing upward momentum as Chinese stocks face headwinds from disappointing economic data. The Shanghai Composite Index saw a slight dip of 0.06% to close at 3,251, while the Shenzhen Component fell 1.33% to 10,156. This decline comes amid unexpected contraction in factory activity and a sharp slowdown in the services sector's growth. Additionally, industrial profits in China declined by 3.3% in 2024, further dampening investor sentiment. Despite new government initiatives announced on January 30 to support the stock market, including measures to boost equity and bond ETFs, several major firms experienced significant losses, contributing to the bearish outlook.
China's economic challenges are compounded by broader concerns over deflation and a weakening yuan, which has depreciated around 15% against the US dollar since March 2022. The country's growth rate, which hit 5% in 2024, is expected to slow to 4.5% in 2025, with domestic consumption struggling due to low consumer confidence and overproduction issues. These factors have led to persistent deflationary pressures, impacting corporate earnings and further weighing on market performance. As Chinese markets remain closed until February 4 for the Lunar New Year holidays, the bearish sentiment is likely to persist, benefiting inverse ETFs like YANG.
The YANG ETF rose to $57.40, marking a 2.04% increase as of 10:00 AM on January 31.