My investment idea today is more of a macro play than I usually recommend. It’s an exchange-traded fund called iShares FTSI/Xinhua China 25 Index (FXI). The name is a mouthful, so I’ll just keep calling it FXI.
The FXI follows the Dow Jones Industrial Average of China, representing the performance of 25 of the largest and most liquid Chinese stocks that trade here in the U.S. As such, it serves as a snapshot of the health of the market, not rising as fast as the hottest Chinese stocks, but not falling as quickly either.
It’s a macro play because owning it gives broad exposure to China. It’s a good choice for right now because the issue has been rising strongly since the middle of January and recent volume clues–specifically, above-average volume on February 4 and 5–indicate increasing institutional interest in the future of Chinese blue chips.
Investments like the iShares ETF provide a chance to benefit from a macro story like the continuing growth of China without doing the detail work to select likely winners from among all of the Chinese stocks that trade as American Depositary Receipts, or ADRs, on U.S. exchanges.
In mid-January FXI was trading at 23. Now it’s at 28. There is possible resistance at 31/32 from December and January, but another piece of good news to silence the China doubters could sweep that all away. I think it’s a reasonable bet.