The surge in the polls for Hillary Clinton has been a boon for all Chinese stocks, even the ones that don’t necessarily need help. Just take a look at Alibaba Group Holding Ltd (NYSE:BABA).
After riding out a sketchy January, it has been clear skies for BABA stock, which is up nearly 25% year-to-date. BABA is also in triple-digit territory for the first time in over a year.
Interestingly, the “road to $100” started in earnest a few weeks after the Democratic National Convention. BABA stock added to the momentum following the first presidential debate, moving up 2%. The day after the vice-presidential debate between Republican Mike Pence and Democrat Tim Kaine, BABA gained 1%, then another 2% after the second Trump-Clinton go around.
]This is not to suggest that BABA is moving only based on American political rumblings. Alibaba is one of the flagship names among Chinese stocks, and this reputation is well deserved. Profitability margins are best-in-class, return on equity is outstanding and the balance sheet is very stable.
Best of all, the company is growing the top line at a phenomenal rate. No one’s worried about BABA.
Chinese Stocks Hoping for Hillary Clinton: China Petroleum & Chemical Corp (SNP)[Oil stocks]
Unless you brilliantly timed the market, no one associated with the oil and energy industry has been having a good time. Sure, commodity prices have rallied this year, but that’s a pittance next to what has been lost.
Therefore, it’s reasonable to assume that China Petroleum & Chemical Corp (ADR) (NYSE:SNP) wouldn’t be affected by our — rather embarrassing — political discourse. Surely, SNP has bigger problems on its plate?
Yet surprisingly, SNP has reacted to the presidential debates — and quite strongly. Immediately after the first dust-up, SNP gained 2%. It tacked on another 2% following the awkward second round.
Funnily enough, SNP had its best session at the conclusion of the vice-presidential debate, gaining nearly 4%. In an election cycle of firsts, the words of potential vice presidents carried more leverage than the top of the ticket.
There’s actually an argument to be made that SNP has the most to lose from this election. One of Donald Trump’s specific accusations is that China is a currency manipulator. A ham-fisted approach towards the second-biggest economy in the world could create unwanted consequences in currency markets. SNP and other Chinese stocks sensitive to such fluctuations could falter under a Trump administration.
Right now, that looks to be in doubt, which is favorable for SNP shareholders.
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