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The Direxion China 3x ETF (YINN) Stock Price Soared 2161%. Here’s Why

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Updated 31 May 2022

Key points:

  • The Direxion Daily FTSE China Bull 3x Shares ETF (YINN) soared 2161%.
  • The rally was triggered by a 20:1 split done by Direxion to boost YINN prices.
  •  Investors cheered the moves, as evidenced by the trading activity and rallies.

Investors work up today to find the Direxion Daily FTSE China Bull 3x Shares ETF (NYSEARCA: YINN) stock price has soared over 2161% (20X) during premarket trading. For those wondering what triggered the massive price move, the answer is nothing terrible happened apart from a 20 for 1 stock split.

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Also read: What Are The Best Performing ETFs In 2022.

Direxion, the issuer of the leveraged daily bull ETF that tracks the movements in 50 of the largest stocks listed on the Hong Kong Stock Exchange, had announced the reverse split about a month ago, on April 29, 2022.

By now, regular readers know that a reverse stock split is usually implemented to shore up the stock price of an asset that has fallen significantly and is currently trading at unsustainable levels.

YINN shares had fallen 53.66% this year and were trading at $3.86 at the market close on Friday, after which the 20 for 1 reverse split was executed. The shares were trading at $87.28 at writing and were up 2161.1%, indicating that the reverse split had worked as expected, given that the gains were much higher than the expected 2,000% rally.

Interestingly, despite being an inverse 3x bull ETF, which means that it tracks the bullish movements in the FTSE China 50 Index (TXIN0UNU), YINN stock has been falling since it is a leveraged inverse ETF.

We cannot overemphasise the risks associated with leveraged inverse ETFs, given that they tend to lose money over the long term. YINN has lost 78.39% of its value over the past 12 months. Its losses since its inception on December 03, 2009, are much smaller at 16.31%, primarily because it is a bull ETF.

Direxion also affected a 10 for one reverse stock split in its Direxion Daily CSI China Internet Index Bull 2X Shares (NYSEARCA: CWEB), whose shares were trading up 999.27% at writing. CWEB’s gains were close to 10x its Friday closing price but were off by a few basis points.

Investors appreciated the reverse split given the number of trades executed today and the ETFs’ decent gains after the reverse split.

Remember that you should not hold inverse leveraged ETFs for long periods as they are designed to produce daily gains, not long term gains.

*This is not investment advice. Always do your due diligence before making investment decisions.

Direxion ETF YINN stock price.

The YINN stock price soared by 2161.14% to trade at $87.28 premarket, rising from Friday’s closing price of $3.86.