We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Keep an Eye on These ETF Areas as US & China Plan Trade Meet
Read MoreHide Full Article
Trade tensions between the United States and China have hit a fever pitch. On Aug 8, China announced 25% tariffs on U.S. imports worth another $16 billion in retaliation to the taxes to be imposed on an equal amount of imports by U.S. authorities starting Aug 23. The targeted commodities include crude oil, diesel, cars and coal.
Moreover, the Trump administration was considering a hike in tariffs from 10% to 25% on $200 billion worth of additional Chinese goods against which a China reprisal is expected. Things have heated up so much that the United States and China plan to meet later this week in Washington to find some common area of agreement. This will be the first meeting of its kind since July.
While experts caution against expecting much, the ETF areas mentioned below are likely to move up/down post the meet.
Agriculture
Agricultural products like yellow and black soybean faced a retaliatory tariff. Notably, China purchases about half of the U.S. soybean and is the second-largest buyer of American cotton. News of a conciliatory summit between the United States and China has driven soybean prices of late. Teucrium Soybean ETF (SOYB - Free Report) should gain if from a positive outcome of the meeting (read: US Farm Belt at Risk on China Tariffs: ETFs in Focus).
Semiconductor
Per Morgan Stanley equity strategists, “semiconductor and semiconductor equipment companies have the highest revenue exposure to China at 52%” and are thus exposed to maximum risks on rising trade tensions (read: Apple's iPhone Order Cut Report May Hurt These ETFs).
Chipmaker Qualcomm (QCOM - Free Report) has 65% revenue exposure to China and Nvidia’s (NVDA) sales exposure to China is 56%, per Goldman Sachs. Apart from these, some other tech and semiconductor companies, which have sales exposure to China of 22% to 55%, include the likes of Intel (INTC - Free Report) , Micron Technology (MU - Free Report) and Applied Materials (AMAT - Free Report) . This clearly explains why the semiconductor space is in the spotlight. So, it would be intriguing to follow the movement of semiconductor ETF VanEck Vectors Semiconductor ETF (SMH - Free Report) .
Civilian Aircraft
China’s list of levies includes aircraft. Notably, China is a key market for Boeing Co (BA - Free Report) where it serves as the largest exporter of America. Thanks to trade tensions, China could take harsh actions against such American companies. So, one should keep an eye on aerospace ETFs like iShares U.S. Aerospace & Defense ETF (ITA - Free Report) .
Auto
U.S. auto companies earn about 12% revenues from China. With Beijing slamming tariffs on U.S. auto imports, First Trust NASDAQ Global Auto Index Fund (CARZ - Free Report) should come under pressure.
Energy
U.S. energy companies have about 14% exposure to China. “China is America’s second-largest crude oil customer after Canada. Chinese imports of U.S. crude oil in May, for example, averaged 427,000 bpd, more than any other destination and surpassing Canada’s 289,000 bpd imports, EIA data shows,” as quoted on oilprice.com.
Quite expectedly, China’s proposed levies on U.S. oil imports put U.S. energy companies under pressure. So, on can track ETFs like United States Oil (USO - Free Report) , SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report) and VanEck Vectors Unconventional Oil & Gas ETF (read: Energy ETFs: Victims of China Tariffs).
Tech Hardware & Equipment
Tech companies that have extensive trade relations with China will also be at high risk. In fact, Goldman Sachs has compiled a list of companies with considerable revenue exposure to China. These companies have a 14% revenue exposure to China, per a CNBC article. Such concerns bring SPDR S&P Technology Hardware ETFXTH in focus as well.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Keep an Eye on These ETF Areas as US & China Plan Trade Meet
Trade tensions between the United States and China have hit a fever pitch. On Aug 8, China announced 25% tariffs on U.S. imports worth another $16 billion in retaliation to the taxes to be imposed on an equal amount of imports by U.S. authorities starting Aug 23. The targeted commodities include crude oil, diesel, cars and coal.
Moreover, the Trump administration was considering a hike in tariffs from 10% to 25% on $200 billion worth of additional Chinese goods against which a China reprisal is expected. Things have heated up so much that the United States and China plan to meet later this week in Washington to find some common area of agreement. This will be the first meeting of its kind since July.
While experts caution against expecting much, the ETF areas mentioned below are likely to move up/down post the meet.
Agriculture
Agricultural products like yellow and black soybean faced a retaliatory tariff. Notably, China purchases about half of the U.S. soybean and is the second-largest buyer of American cotton. News of a conciliatory summit between the United States and China has driven soybean prices of late. Teucrium Soybean ETF (SOYB - Free Report) should gain if from a positive outcome of the meeting (read: US Farm Belt at Risk on China Tariffs: ETFs in Focus).
Semiconductor
Per Morgan Stanley equity strategists, “semiconductor and semiconductor equipment companies have the highest revenue exposure to China at 52%” and are thus exposed to maximum risks on rising trade tensions (read: Apple's iPhone Order Cut Report May Hurt These ETFs).
Chipmaker Qualcomm (QCOM - Free Report) has 65% revenue exposure to China and Nvidia’s (NVDA) sales exposure to China is 56%, per Goldman Sachs. Apart from these, some other tech and semiconductor companies, which have sales exposure to China of 22% to 55%, include the likes of Intel (INTC - Free Report) , Micron Technology (MU - Free Report) and Applied Materials (AMAT - Free Report) . This clearly explains why the semiconductor space is in the spotlight. So, it would be intriguing to follow the movement of semiconductor ETF VanEck Vectors Semiconductor ETF (SMH - Free Report) .
Civilian Aircraft
China’s list of levies includes aircraft. Notably, China is a key market for Boeing Co (BA - Free Report) where it serves as the largest exporter of America. Thanks to trade tensions, China could take harsh actions against such American companies. So, one should keep an eye on aerospace ETFs like iShares U.S. Aerospace & Defense ETF (ITA - Free Report) .
Auto
U.S. auto companies earn about 12% revenues from China. With Beijing slamming tariffs on U.S. auto imports, First Trust NASDAQ Global Auto Index Fund (CARZ - Free Report) should come under pressure.
Energy
U.S. energy companies have about 14% exposure to China. “China is America’s second-largest crude oil customer after Canada. Chinese imports of U.S. crude oil in May, for example, averaged 427,000 bpd, more than any other destination and surpassing Canada’s 289,000 bpd imports, EIA data shows,” as quoted on oilprice.com.
Quite expectedly, China’s proposed levies on U.S. oil imports put U.S. energy companies under pressure. So, on can track ETFs like United States Oil (USO - Free Report) , SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report) and VanEck Vectors Unconventional Oil & Gas ETF (read: Energy ETFs: Victims of China Tariffs).
Tech Hardware & Equipment
Tech companies that have extensive trade relations with China will also be at high risk. In fact, Goldman Sachs has compiled a list of companies with considerable revenue exposure to China. These companies have a 14% revenue exposure to China, per a CNBC article. Such concerns bring SPDR S&P Technology Hardware ETF XTH in focus as well.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>