Profit Pregame

A WeChat Ban Could Have Serious Consequences – Here’s How to Protect Yourself

Bans are on the horizon…
President Trump is making some big decisions.

What’s happening?
WeChat is a Chinese multi-purpose messaging, social media, and mobile payment app that has exploded in popularity over the last few years. Released in 2011, it became the world’s largest standalone movie app in 2018 – boasting over one billion monthly active users.

And it has lately been making headlines as President Trump has turned his focus on the app, threatening to ban its use in America. Users haven’t responded well to this either as many depend on this app as their only way of communicating with family and friends in China. But this ban wouldn’t only impact relationships; it could become a significant issue for U.S. companies.

The executive order, which was issued last month, would ban U.S. businesses from “any transaction that is WeChat related” as the Trump administration believes that the app poses a national security risk.

Where’s the money?

Now, in the order, it targets the usage of the app stateside, but its broad wording leaves room for expansion. If the ban goes beyond stateside, it could restrict all U.S. entities, whether they are in the U.S. or globally in China.

And that becomes a massive problem for businesses that operate in China. And I’m talking big-time firms like Starbucks, Walmart, and Nike – as the ban could cut off the line of communication customers use to purchase their products.

To put it into perspective, last year, Walmart noted that 30% of its transactions in China came from its “Scan and Go” app, which is a program that is embedded into WeChat. Nike noted they saw significant momentum from digital partners like WeChat as well. As you can see, this ban could be a wrecking ball for American businesses. So, if I could sum it up in one word, I’d choose uncertainty – but you don’t have to be uncertain about your investment.

And here’s how you can play this developing situation.

Where’s the money?

WeChat joins a list of companies that President Trump is looking to shut down due to privacy concerns.

But the problem with this is that it could backfire quickly if China doesn’t allow U.S. companies to do business there anymore. And like I said before, the impact on large, household name level companies could be unimaginable. I’m talking about names like Apple, Las Vegas Sands, Nike, and more.

Now, how would I play it? In my opinion, I believe that stocks from China have a ton of growth potential, so I’ll be looking to keep my money there. And the two stocks that have caught my eye recently are Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) and KraneShares CSI China Internet ETF (KWEB). Both of these ETFs are showing immense upside – and I believe once the ban hits – people will be flocking to these, trying to get a piece of these stocks.

So, get ahead of the masses and and protect yourself today. Your future self will be grateful.

In the spotlight: Best Buy’s knockout earnings

As the market continues to be run by the bulls, companies have been racing to make their public debuts. And it makes sense that they’d want to establish themselves at this point – especially since stocks continue to break records.

In fact, this has been the most active August in history – with a record-breaking 41 deals worth $16.4 billion going through. That includes special purpose acquisition companies, or SPACs – which are “blank check” funds that investors can tap to support future deal-making. And there’s no sign of this influx slowing down as September is forecasted to be an even busier month for public debuts.

And of the many deals happening – Ant Group has caught the eye of many investors. Ant Group, which is the financial affiliate of Alibaba, has officially filed for concurrent listings. The company is looking to raise as much as $30 billion. This would make the biggest public debut in history.

Another big name looking to join the IPO race is Palantir. Palantir is the secretive Silicon Valley data analytics company. And while they haven’t turned a profit in 17 years, they have big goals for the future, including teaming up with government agencies and corporations to help with a variety of tasks, including tracking the spread of COVID to locating terrorists.

So, as you can see – the current wave of IPOs is painting a bright future. But, I want to encourage you not to jump at the first opportunity you see. Be critical and do your research – and as always, if I spot an opportunity worth going for – you’ll be the first to know.

But Before We Get Too Far Ahead…

While the prospect of multiple new IPOs is very exciting and intriguing, don’t let that trick you into ignoring the countless other opportunities already out there…
In fact, this Tuesday, my Project 303 readers and I closed out a trade on an airline stock you’re likely aware of for a quick 110.53% gain.

If you knew the name of this play, you’d probably think that it was a risky move given the airline industry right now…

But my S.C.A.N. trading system can read all the signs simultaneously, weigh the risks, and send out a recommendation before other traders even have it on their radar.

Click here now to see what other picks are on the horizon.

Community Tips

Inline Feedbacks
View all comments