The thesis

FXI is a China Large-Cap ETF tracking major Chinese companies on the Hong Kong Stock Exchange. The current risk-on rotation benefits FXI, with a macro signal indicating a +20 driver. Conviction stands at 27, suggesting caution. This setup is interesting due to the potential for increased investment in Chinese large-caps.

Why now

The recent comments from Trump on Iran have sparked a risk-on rotation, making this a key moment for FXI. With the Nasdaq 100 rebounding, FXI is well-positioned to capitalize on the current market sentiment.

What to watch

Investors should monitor FXI's performance relative to the broader market, particularly the Dow and Nasdaq, over the next quarter. The ETF's ability to maintain its tracking error and navigate potential macro risks will be key indicators of its success.

Key risks

Valuation risk is a concern, as FXI's performance is closely tied to the broader market. Execution risk also exists, as the ETF's ability to track the underlying index is crucial. Macro risk, particularly related to US-China relations, could negatively impact FXI.