Crisis Could Lead to Big Opportunity in these China Trades

People wearing masks walk past a Chinese national flag as outbreaks of coronavirus disease (COVID-19) continue in Beijing

Civil unrest has gripped most of China.

All as “draconian” COVID lockdowns become too much for those in Shanghai, Nanjing, and Guangzhou to handle.  Some are even calling for President Xi Jinping to resign.

Unfortunately, China has been using its own vaccines, rather than approved global ones, which don’t have the same effectiveness.  It’s part of the reason China saw another 39,791 new cases in a single day.  In addition, according to the Daily Mail, “The ruling Communist Party faces growing complaints about the economic and human cost as businesses close and families are isolated for weeks with limited access to food and medicine.”

As a result of the chaos, Chinese markets are taking a hit.

At the open, Hong Kong’s Hang Seng index fell 4.2%.  The Shanghai Composite was down 1.5%, as the tech-heavy Shenzhen Composite Index slipped 1.6%.  Unfortunately, unless policymakers rethink their stance on zero COVID mandates, the rare chaos in China could continue.

However, the crisis could eventually lead to opportunities in downed Chines stocks and ETFs.  The Krane Shares Hang Seng Tech Index ETF (KTEC), for example, was clobbered for most of the year by the COVID policies.  Once policies are changed, KTEC could potentially move higher.

Or, look at the SPDR S&P China ETF (GXC). At $71.39, it’s oversold on COVID news, too.  But should China rethink its COVID policy, GXC could run.  There’s also the ProShares Ultra FTSE China 50, the Global X MSCI China Energy ETF, the Matthews China Fund, and the iShares China Index ETF.

All could offer significant opportunities for patient investors.