Happy Monday, everyone! 2021 is slowly getting into gear and there’s already so much affecting the markets. Today’s focus is on the ongoing US-China Trade War. After a brief update on that, including a look at which Chinese stocks might be worth your attention this year, we’ll assess the top trading events of the week. Ready to roll?
Biden to maintain the status quo?
In case you missed it, Joe Biden became the 46th President of the United States, and he didn’t hang around! He’d soon jumped into his chair behind the resolute desk, pen in hand, and signed-off 30 executive orders in his first 3 days.
It’s clear that change is coming to many parts of the US’ agenda, but early signs suggest that the country’s stance with China over trade is not one of them.
A change of tone
While Big Joe’s style may not be as theatrical as his predecessor, it is likely that the practicalities of his policy toward China will remain the same, at least for now. This week, Janet Yellen, JB’s pick to lead the Treasury Department, promised to take on China’s “abusive, unfair and illegal practices.”
Biden’s first priority is to rebuild relationships with Europe and tackle China as a united front. Something Trump was never interested in.
Regardless of this, what does 2021 hold for China and which stocks might be worth a look at?
Chinese stocks to watch in 2021
A lot will ride on the Biden administration’s actual stance, but for now, here are three of the hottest Chinese stock picks for the year.
1. China Petroleum & Chemical Corporation (SNP)
It’s expected that China will see some hefty economic growth in 2021, which will shove domestic oil demand into top gear. As Sinopec is one of the largest petroleum and petrochemical companies in Asia, they stand to benefit nicely from that growth.
The company had a super strong end to 2020, which has shown no sign of stopping as we move into 2021.
SNP, 6 months
2. Baidu, Inc. (BIDU)
Baidu is a Chinese-language Internet search provider and one of the largest AI and Internet companies in the world. Baidu’s recent venture into EV-making is the main thing propelling investors of late, and they’ve really been going at it!
Baidu is also benefiting from the anti-monopoly crackdown on internet rival Alibaba Group (BABA).
An extremely strong H2/2020 has seen company stock rise 108.7% in just 6 months.
BIDU, 6 months
3. Tencent Holding Ltd. (TCEHY)
Tencent is an Internet, mobile, telecom services and online advertising company. It’s also the creator of Wechat, the world’s 5th most used app, which has around 1.2 billion users each day.
The company’s stock gained 47% in 2020 and also had a nice bit of news earlier this month. Shares in the company rose by 5% on the 14th January, following the news that the US government decided not to ban investment in the company.
This example shows the impact that the US-China Trade War can have on companies and investors will be watching the Biden administration to see if those plans suddenly change.
TCEHY, 6 months
We can’t be sure about the fate of these three companies, of course. One thing that we do know is that the US-China Trade War is far from over and, whichever way it swings, there will be a heavy impact.
This is one to watch, for sure!
What’s on the trading agenda this week?
Here are some of the most potentially volatile events of the trading week…
No major events are planned.
GBP — Employment Change (OCT)
USD — CB Consumer Confidence (JAN)
AUD — Inflation Rate YoY (Q4)
USD — Durable Goods Orders MoM (DEC), Fed Interest Rate Decision
USD — GDP Growth Rate QoQ Adv (Q4)
USD — PCE Price Index YoY (DEC), Michigan Consumer Sentiment Final (JAN)
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The Contentworks team