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Taiwan & China Get Cozy — Here's How to Play It!

This post is part of a regular series written by ETF Trends editor Tom Lydon, special for CNBC.com.

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China and Taiwan have long been adversaries, but in recent months, observers have been noticing some small shifts in the countries’ attitudes toward one another. Those who have been eyeing the relationship between the two nations are especially excited about a key invitation Taiwan received.

The World Health Organization (WHO) invited Taiwan to the World Health Assembly (WHA) as an observer; that China is allowing Taiwan to attend such a major meeting is seen as a big concession toward the country.

The WHA invitation caught the attention of investors. But the invitation was just the icing on the cake of several other positive developments in the relationship between the two:

- Tourism between the two countries has jumped, as China has added hundreds of flights between the two countries

- China has also sent pandas to the Taipei zoo in a show of diplomacy

- Recently, China and Taiwan met to put together some agreements that could lead to a flood of investment in financial services to flow across the Taiwan Strait

How to Play It:

iShares MSCI Taiwan is up 29.2 percent year-to-date. It’s a diversified fund with 101 holdings representing hardware (45 percent), industrial materials (21.7 percent) and financial services (14.7 percent).

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Compare with Other China Plays:

iShares FTSE/Xinhua China 25 Index

iShares MSCI Hong Kong Index

PowerShares Gldn Dragon Halter USX China

SPDR S&P China

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Tom Lydon is the editor of ETF Trends and author of iMoney: Profitable ETF Strategies for Every Investor.

Disclaimer