By: Andrew Keene
On the heels of the Chinese Economic Work Conference we will focus on FXI, an ETF tracking 25 of the biggest and most liquid Chinese companies. Up 3.24% year to date, we believe we see cause to expect a further increase in price in light of the improved economic data coming out of China. Vehicle imports are up 22.9% in the first 9 months of 2012 compared to the same period in 2011, and the government’s PMI hit a 7-month high of $50.60 as a result of direct investment programs. Last week also saw industrial output and retail sales beat expectations, up 10.1% and 14.9% respectively from levels one year ago. Banks and energy companies dominate FXI, the top 5 holdings are Petrochina Co Ltd, Industrial Commercial Bank of China Ltd, China Construction Bank Corp, Bank of China Ltd, and Agricultural Bank of China dominate FXI’s holdings. This puts FXI in a potentially good position to ride the latest wave of Chinese growth, capitalizing on development initiatives and further government spending on infrastructure and urbanization.
Sell Jan 40-38 bull put spread for $0.90
Risk: $110 per 1 lot
Reward: $90 per 1 lot
Breakeven: $39.10