ProShares Launches Double-Leveraged Asia Shorts

Perhaps it's apropos that my wife and I just finished a conversation regarding our Chinese investments, which along with Vanguard's (VWO) and Claymore's (EEB) ETFs, decorate our emerging markets cake. Our holdings in China Life (LFC) and Sinopec (SNP) have experienced impressive growth since we purchased them, which wasn't long after they debuted. Similarly, our new position in General Steel Holdings (GSI) has yielded strong gains.

But with our desire to maintain a little yin with our emerging yang, we craved a hedge against our gains should we experience a continued pummeling of our (long term) Chinese positions. We looked to ProShares. After much anticipation, we found that ProShares' anti-FTSE/Xinhua 25 (FXI) (the UltraShorts on China (FXP)), (as well as an anti-MSCI (EWJ), the UltraShorts on Japan (EWV)) will begin trading today:

ProFunds Group…announced today that two new Short International ProShares – the first ETFs designed to go up when the Chinese and Japanese markets fall – are set to launch November 8…The two ETFs provide investors with a convenient way to hedge gains or to seek profit from downturns in [these countries'] markets.

Specifically, ProShares Chairman and CEO Michael Sapir asserts: With the FTSE/Xinhua 25 Index appreciating by nearly 600% in the last five years, there is a great deal of talk of a potential for a 'China bubble'. The new ProShares UltraShort FTSE/Xinhua China 25 ETF [and the new UltraShort MSCI Japan] can be used by investors to seek to hedge a portfolio with China [or Japan] exposure from losses or to pursue gains from a falling Chinese [or Japanese] market.

But for everyone out there ready to pile in – especially with the FXP – please be mindful that FXP and EWV are double leveraged, meaning that they are engineered to deliver twice the inverse of the daily performance of the FXI and EWJ, respectively. So, yes, while Wednesday's FXI losses of $9.45 might have resulted in a euphoria-inducing roughly $19 gain with the FXP, don't forget what will happen to the FXV on those days when FXI rolls to new highs, up some obscenely rich amount.

Invest soundly.

Disclosure: Author is long LFC, SNP, and GSI. By the time this article is published, he might be long FXP, as well. Citations were taken from ProFunds' ProShares website. FXP and EWV will trade on the AMEX.