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Fast Funds: Hot Ways To Play China

Mounting signs suggest Beijing's $586 billion stimulus is starting to show results. How should you game it?

The latest data from China shows manufacturing expanded in June with PMI numbers edging slightly higher to 53.2 from May's 53.1. "This PMI indicates the economy is midway through a recovery, despite some slowdown in infrastructure momentum," Credit Suisse economist Dong Tao said in a report.

Meanwhile, the World Bank raised its 2009 growth forecast for China last month from 6.5 percent to 7.2 percent due to the stimulus-driven investment boom.

Private sector economists also have raised growth forecasts and say China is likely to be the first major economy to emerge from the downturn.

How should you game it?

One strategy that the Fast Money traders often recommend is using Exchange Traded Funds or ETFs to spread out the risk. And Christian Magoon of Claymore Securities joined the panel to make a pitch for an ETF that his company runs that may interest you.

CLAYMORE CHINA SMALL CAP ETF (HAO)

Invests in China’s Small Cap Stocks

Top Holdings:
Citic Pacific Ltd.
Sino-Ocean Land Holdings
Yanzhou Coal Mining Co.
Dongfend Motor Group Co.
CTRIP.com International Ltd

The stimulus appears to be working in China, explains Magoon. Auto sales are up. Home prices are up and factory orders are improving, And one area that stands to benefit is smaller cap companies. These are names that are not state-owned enterprises. Year to date the HAO is up around 50%.


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Trader disclosure: On July 10th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Owns (MSFT), (PBR); Finerman's Firm And Finerman Own (BAC) Preferred Shares; Finerman's Firm And Finerman Own (RIG); Finerman's Firm And Finerman Own (WFC) Preferred Shares, Finerman's Firm Is Short (WFC); Finerman's Firm Is Short (SPY), (USO), (BWA), (IYR), (IJR), (MDY), (SPY), (IWM); Finerman's Firm And Finerman Own (FLS); Seymour Owns (TSO); Terranova Owns (TER), (FTO), (SUN), (RIMM), (MSFT); GE Is The Parent Company Of CNBC

Terranova Works For (VRTS); Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV); Virtus Investment Partners Owns More Than 1% Of (ABD), (CBL), (CAL), (CLB), (DLR), (EXR), (IGE), (MEE), (DBC), (DBV), (DBA), (SKT), (TNB), (UA), (WBMD);Virtus Investment Partners Owns More Than 1% Of St Mary Land & Exploration Co; Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights

For Christian Magoon:
Claymore Is The Investment Advisor And Distributor Of (HAO), (TAN)

CNBC.com with wires