With the Chinese equity market returning to free-fall mode, traders are once again lining up to short the bejesus out of A-shares ETFs. This time around however, it’ll cost them an arm and a leg.
Chris Dieterich over at Barron’s reports that borrowing shares of the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF — the largest U.S.-listed A-shares ETF — is nearing its highest since the fund’s inception, making it a lot — a way lot — harder for China bears to cash in on the market’s implosion.
Short sellers apparently need to pay the “equivalent of a 40% annualized drop just to break even,” a staggering, nay, a completely riduculous amount given that ASHR already slipped 29% since its mid-June peak.
He points out that there are several inverse A-shares ETF’s out there, singling out the Direxion Daily CSI 300 China A Share Bear 1x Shares and adding that it rose 9% intraday yesterday.
With the Australian dollar testing support in the middle of a commodity crash, a Chinese downturn, and a hawkish Fed, some people are looking into the Aussie too.
Photo: GotCredit