May 19, 2007
Ways To Take a Leveraged Short Position on China
Many people have asked me how to get short the Chinese market using maximum leverage and the only products I can think of are these:
- FTSE/Xinhua China 25 Index Futures & Options
- Hang Seng China H - Financials Index Futures
- Hang Seng China Enterprises Index (H-Shares) Index Futures & Options
You can see from the average daily volume numbers (April 2007) that the liquidity is nothing to write home about, except maybe for the H-shares Index Futures (the H - Financials Index Futures just started trading on April 16 - early days).
If you have an account at Interactive Brokers, you should have access to these products. I’m not recommending you take a leveraged short position in any of these markets, just as I don’t recommend standing in front of a loaded freight train going 100 miles per hour.
Anyone have any brighter ideas than these?
Cat: | Time: 9:41 pm (utc+8)
May 20th, 2007 at 11:13 am
Would have been much easier to simply play the long side on the way up. But for those determined to short, here are individual stocks that trade on U.S. exchanges.
ACH Aluminum Corp. of China
CBA Brilliance China Auto Holding
CNCA Chardan North China Acquisition Corp.
CNCAW Chardan North China Acquisition Corp.
CVR Chicago Rivet & Machine Co.
CHCG China 3C Group
CAGC China Agritech Inc.
CAAS China Automotive Systems Inc.
CBAK China BAK Battery, Inc.
CBPC China BioPharma Inc.
CDC.V China Diamond Corp.
CHID China Digital Communications Group
CDGT China Digital Media Corp.
CHDT China Direct Trading Corp.
CHND China Direct, Inc.
CDSG China DongSheng Intl, Inc.
CEA China Eastern Airlines
CEDA China Education Alliance, Inc.
CXTI China Expert Technology Inc.
CHFI China Finance Inc.
JRJC China Finance Online Co. Ltd.
CHFR China Fruits Corp.
CHN China Fund, Inc.
GRRF China GrenTech Corp. Ltd.
CHHL China Health Holding, Inc.
CHRN China Huaren Organic Products, Inc.
CIWT China Industrial Waste Management, Inc.
CIVY China Ivy School, Inc.
CKGT China Kangtai Cactus Biotech Inc.
LFC China Life Insurance Co. Ltd.
CHMD China Media Group Corp.
CMED China Medical Technologies Inc.
CHL China Mobile Ltd.
CHMSE China Mobility Solutions, Inc.
CEO China National Offshore Oil
CHNG China Natural Gas, Inc.
CN China Netcom Group Corp
CNEH China North Petroleum Holdings Ltd.
SNP China Petroleum and Chemical Corp. (Sinopec)
CPHI China Pharma Holdings, Inc.
CPICF China Pharmaceuticals Corp.
CPSL China Precision Steel Inc
CPMM China Premium Lifestyle Enterprise, Inc.
CREG China Recycling Energy Corp.
CHNR China Resources Development, Inc.
CSCT China Security And Surveillance Technology
CSWT China Software Technology Group Co., Ltd.
ZNH China Southern Airlines Co. Ltd.
CSUN China Sunergy Co. Ltd.
CNTF China TechFaith Wireless Communication
CTDC China Technology Development Group Corp.
CHA China Telecom Corp.
CHU China Unicom Ltd.
CVDT China VOIP and Digital
CWLC China Wireless Communications Inc.
CWTD China World Trade Corp.
CYXI China Yingxia Intl Inc.
CYTV China YouTV Corp.
CYD China Yuchai Intl Ltd.
CHWE Chinawe.com Inc.
FNI First Trust ISE ChIndia Index Fund
GCH Greater China Fund, Inc.
GCME Greater China Media and Entertainment Corp.
FXI iShares FTSE/Xinhua China 25 Index Fund
JFC Jardine Fleming China Reg
CAX Morgan Stanley CPN AMEX China
NMCH Newmarket China Inc.
PTR Petrochina Co.
PGJ PowerShares Golden Dragon Halter USX China
GXC SPDR S&P China ETF
TFC Taiwan Greater China Fund
TCM Tongjitang Chinese Medicines Co.
CHDX U.S.-China Industrial Exchange, Inc.
XHUA Xinhua China Ltd.
May 20th, 2007 at 11:30 am
There’s also the recent IPO: XFML which btw got scathing coverage in Barron’s this week.
May 20th, 2007 at 2:12 pm
Eric: Thanks for the list though there are a bunch more listed in the US that you’ve missed.
May 20th, 2007 at 2:57 pm
I have a chinese friend in Beijing. He has a stock account but he doesnt know if he can go short. CM do you know?
May 20th, 2007 at 9:56 pm
max: As far as I know you can’t sell short stocks in China.
May 21st, 2007 at 5:13 am
nope, no short selling, on the flip side, no margin either. All paid up shares :-)
Imagine what their market would be like with 50% margin.
Yowza!!
May 21st, 2007 at 9:26 pm
No margin from brokerage, but they use their house equity- which is quite a leverage.
May 21st, 2007 at 9:48 pm
yin: I don’t know how many people are putting up their houses as collateral to trade … that seems a pretty extreme thing to do, but what do I know, I’m a cautious old man.
May 22nd, 2007 at 6:45 pm
1) Those futures have very light volume.
2) A correction may be a while coming - until the olympics there will be money pouring into the markets
3) Taiwan shares haven’t really gone up and as such may not be good candidates
4) My feeling is that there would have been a correction if the gov’t had allowed it. But several times they have shown willingness to step in. I would be careful shorting
5) Careful with FXI as that includes china petrol - one of the few very profitable chinese companies
6) Once the world wakes up to the fact that most of these compaines don’t make any profits expect a prolonged recession (Like Taiwan the past 7 years or Japan). During this time there will be plenty of opportunities to short.
May 22nd, 2007 at 9:51 pm
Just keep an eye out and wait. There will come a day when the short side is the right side. Until then it would be best to look for low-risk pullbacks or consolidation spots to get long. When the short side starts to work it will be quite obvious.
June 24th, 2007 at 7:41 pm
All of those indices are H-shares traded outside of China, and whose A-share components are trading at a large premium, which has always been the case. For example, an H-share of Huaneng Power currently trades at HK$8.87 on the HK Stock Exchange while its A-share counterpart trades at RMB13.07 on the Shanghai Stock Exchange. Same economic rights.
November 12th, 2007 at 4:38 pm
[…] Don’t Confuse the H-share and A-share Markets China’s Stock Markets Have Topped Ways To Take a Leveraged Short Position on China Cat: […]