U.S. stocks that do best when China stimulates its economy: Trivariate
Trivariate Research is laying out some U.S. companies that could win big in China’s latest stimulus deal. Last week, China’s central bank released a raft of support measures to help stimulate economic growth and boost a struggling real estate market in the second-largest economy in the world. The measures included cutting the amount of cash banks need on hand. “We see the China stimulus as an incremental positive to risk-taking,” wrote Trivariate founder Adam Parker in a note to clients. “We analyzed prior China stimuli and show the results here, but our judgment is to own the individual U.S. equites that have reacted strongly this past week or have typically traded with a high correlation to the A-shares.” Between the 11 stimulus deals in China since 2008, Parker notes that value and megacap names tend to fare the best, with communication services and utilities among the better-performing sectors and energy and information technology among the worst. Here are some of the names that could benefit this time: Trivariate Research views commodity stocks Southern Copper and Freeport-McMoRan among the potential winners in a China stimulus deal, with shares up more than 37% and 17%, respectively, in 2024. Trivariate is not the only firm that views commodity stocks as potential beneficiaries, with Morgan Stanley recently naming Freeport in its shopping list for commodity stocks. Gaming stocks could also win big with China’s stimulus deal. That includes shares of resort and casino operator Las Vegas Sands , up a mere 2% year to date. Estée Lauder shares should also benefit from bullish news coming out of China. Shares have lost nearly a third of their value in 2024 as the cosmetics maker grapples with lagging sales in the country. Roku , Capri Holdings , Yum China and MicroStrategy also made the list.
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