FXP _ "Ultra Short" or "Ultra Long" ETF ??

B

blnbr

How could the so called "UltraShort (2x) FTSE/Xinhua China 25 ProShares " with symbol FXP tumbled $5 dollars to $95 this morning while the China stock market closed down to 8 month new low last night and the S&P 500 also went down this morning?? And at the same time, most of the major China stocks traded in NYSE were down, and another (long) ETF, CAF _ the Morgan Stanley China A Sh Fund, fell about a dollar.

Is FXP an "Ultra Short" or "Ultra Long" ETF ??

I believe it's not the first day FXP behaves like this. What's going on here, can anybody explain?

:confused: :mad:
 
Inverse Ultra ie trades double inverse of the FXI. FXI up 3% FXP down 6%. Most of the stocks in the FXI are traded in Hong Kong and so FXI tracks the Hang Seng not the Shanghai index like CAF.
 
HSI was up. It is a convergence of prices as the china stocks in Hong Kong had been trading at a discount to the prices in Shanghai. Now that there is more access allowed to Hong Kong market from the mainland and more access to the Shanghai exchange by foreign firms they are arbing the prices in to parity. Short on the Shanghai exchange and long in Hong Kong. That's part of the explanation anyway. Other factor is that these are the big caps and money tends to flow to them on weakness so even when the index is down the FXI/CAF may not have a matching delta.
 
Quote from Mvic:

HSI was up. It is a convergence of prices as the china stocks in Hong Kong had been trading at a discount to the prices in Shanghai. Now that there is more access allowed to Hong Kong market from the mainland and more access to the Shanghai exchange by foreign firms they are arbing the prices in to parity. Short on the Shanghai exchange and long in Hong Kong. That's part of the explanation anyway. Other factor is that these are the big caps and money tends to flow to them on weakness so even when the index is down the FXI/CAF may not have a matching delta.
More...

Good points, thanks. Certainly the correlation is very, very poor. So trade it as an HSI proxy.
 
SSE is made up of 180 Chinese stocks listed in Shanghai vs FXI which tracks the 25 large caps traded at Hong Kong prices. Frustrating for the OP nevertheless.
 
Quote from Mvic:

HSI was up. It is a convergence of prices as the china stocks in Hong Kong had been trading at a discount to the prices in Shanghai. Now that there is more access allowed to Hong Kong market from the mainland and more access to the Shanghai exchange by foreign firms they are arbing the prices in to parity. Short on the Shanghai exchange and long in Hong Kong. That's part of the explanation anyway. Other factor is that these are the big caps and money tends to flow to them on weakness so even when the index is down the FXI/CAF may not have a matching delta.
More...

Thanks Mvic, You gave a good answer to my question. I will remember to watch the China stocks traded in HK market as well when I trade FXP.
 
Wait for FXP to come back down, best buying opportunity in FXP is below 75 a share. Tough to trade it between 90-110 area.
 
I watch both the China and HongKong indexes. If they are bearish I buy FXP, if they turn bullish I buy FXI or CAF. I trade both ways.
 
You must log in or register to reply here.
Back
Top