It’s the calm before the storm.
With China cracking down on Hong Kong, tensions could lead to sky-high volatility.
All after China approves a proposal to impose a new national security law for Hong Kong.
While details of the potential law are scarce, it will reportedly target secession, subversion of state power, terrorism, and foreign interference. And it won’t sit well with the U.S., especially after President Trump said the U.S. will have “a very strong reaction” to new China legislation.
It’s a “disastrous decision,” added Secretary of State Michael Pompeo.
It’s “the latest in a series of actions that fundamentally undermine Hong Kong’s autonomy and freedoms and China’s own promises to the Hong Kong people under the Sino-British Joint Declaration. “The United States stands with the people of Hong Kong as they struggle against the CCP’s increasing denial of the autonomy that they were promised.”
While it’s not clear what the potential repercussions could be, China is ready for a fight.
“The Chinese government is firm in its determination to safeguard China’s sovereignty, security and development interests, to implement the principle of “one country, two systems” and to oppose any external interference in Hong Kong affairs. If someone is bent on harming China’s interests, China will take all necessary measures to hit back,” says Foreign Ministry spokesman Zhao Lijian.
From here, a war of words – and the potential for a new trade war could see a return of volatility. If that’s the case, some of the top investment opportunities to watch include:
ProShares Ultra VIX Short-Term Futures ETF (UVXY)
The ETF was designed to match two times (2x) the daily performance of the S&P 500 VIX Short-Term Futures Index. It last traded at $34.
VelocityShares Daily 2x VIX Short-Term ETN (TVIX)
The ETN tracks an index of futures contracts on the S&P 500 VIX Short-Term Futures Index. As volatility ticks higher, the TVIX ticks higher. It last traded at $144.06.
iPath S&P 500 VIX Short-Term Futures (VXX)
The VXX ETN provides exposure to the S&P 500 VIX Short-Term Futures Index Total Return. It last traded at $33.15.
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