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Trade War Fears Grip MedTech: 3 Stocks on the Line of Fire
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The trade war cacophony has spread far and wide, not sparing the investment world. The conflict between two of the world’s biggest economies has led Dow to fall more than 1,100 point in just two days last week. Although it is gradually recovering, the market is still fraught with possibilities of other outbreaks.
The 10 sectors that have been identified by Trump for imposition of higher tariff are now on investors’ radar. Healthcare, including medical equipment, is one of the sectors which might face the brunt of the trade dispute.
Current Scenario
Unlike what most economists had initially expected, China is fast adopting stances to square off America’s advantage points in this import tariff game.
In response to Trump’s proposed imposition of $60 billion in annual tariffs on Chinese products, Beijing has announced the initial $3 billion of reciprocal tariff on 128 (roughly) imports from the United States and is supposedly preparing a bolder counter-attack.
In the wake of the tariff threats, Nobel Prize-winning economist Robert Shiller has warned of an impending economic crisis.
Meanwhile, a Bloomberg report states that the United States will maintain a lead in the trade conflicts with China. This is because the United States, to some extent, is a monopsony market with a large number of buyers. Thus, if the nation stops purchasing Chinese products, China will not be able to channelize that surplus to Canada or Indonesia at the same price. However, China will not be able to adopt a tit-for-tat strategy as it does not import on the same scale from the United States.
Accordingly, following last week’s crash, the market is slowly looking up. The news that the nations are likely to resolve the issue mutually is fuelling the recovery. However, whether the talks will extinguish the possibilities of a trade war completely is yet to be seen. Meanwhile, investors are caught in the “America First” and “Made in China 2025” web.
Is Medical Device Caught in the Storm?
As stated earlier, U.S. Trade Representative Robert Lighthizer has identified healthcare as one of the 10 sectors which are subjected to the $60 billion U.S. tariff. More specifically, Trump has considered biomedicine and high-performance medical devices, which include China’s advanced chemicals and medical equipment, respectively.
Needless to say, this has triggered a decline in the sector. Following the news and with chances of China’s retaliation, losses were widespread in the Medical device sector with bigwigs taking severe blows. We note that, the sector has gained significantly from profits earned by a number of medical device companies from the BRIC nations.
Going by a Market Realist report, companies like Medtronic plc (MDT - Free Report) , Becton, Dickinson and Company (BDX - Free Report) , Abbott and others saw considerable weakness on Mar 23 as talks of a U.S.-China trade war started doing the rounds.
Although these stocks are gradually reviving on rising chances of the two nations negotiating certain terms, investors consider them still extremely vulnerable and widely exposed to the trade conflict given their huge business network in Mainland China.
We have shortlisted three stocks that are facing the brunt of the tumultuous market conditions.
Zimmer Biomet Holdings, Inc. (ZBH - Free Report) : This Zacks Rank #5 (Strong Sell) lost 6.5% on Mar 23. We note that, the company has been investing heavily to cash in on the Chinese Reconstructive and Trauma markets. Strategic investments in these regions over the past several quarters to improve operational and sales performance are yielding results. In the fourth quarter, the company witnessed improvement in its Asia Pacific business on solid distributor orders. China particularly demonstrated strong growth. Thus, any form of retaliation by China will impact the company.
Medtronic: In the last reported quarter, Medtronic’s businesses in China showed strength, growing double digits. According to the company, within the next decade, China is expected to be its biggest health care market. Needless to say, this Zacks Rank #3 (Hold) company is expending large amounts of cash to strengthen its business in this market. The company is focused on developing public and private partnerships as well as executing channel optimization strategies. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the last few years, Abbott (ABT - Free Report) has been leading the emerging market investment trend, with about 50% of total sales coming from this region. This Zacks Rank #3 stock’s core Established Pharmaceuticals Division ("EPD") business operates solely in emerging geographies, with leading positions in Chinese pharmaceutical markets for branded generics. In the last reported quarter as well, China demonstrated double-digit growth in EPD.
Trade war or not, these stocks are in an extremely vulnerable position with a broad network and diversified business base in China.
Breaking News: Cryptocurrencies Now Bigger than Visa
The total market cap of all cryptos recently surpassed $700 billion – more than a 3,800% increase in the previous 12 months. They’re now bigger than Morgan Stanley, Goldman Sachs and even Visa! The new asset class may expand even more rapidly in 2018 as new investors continue pouring in and Wall Street becomes increasingly involved.
Zacks’ has just named 4 companies that enable investors to take advantage of the explosive growth of cryptocurrencies via the stock market.
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Trade War Fears Grip MedTech: 3 Stocks on the Line of Fire
The trade war cacophony has spread far and wide, not sparing the investment world. The conflict between two of the world’s biggest economies has led Dow to fall more than 1,100 point in just two days last week. Although it is gradually recovering, the market is still fraught with possibilities of other outbreaks.
The 10 sectors that have been identified by Trump for imposition of higher tariff are now on investors’ radar. Healthcare, including medical equipment, is one of the sectors which might face the brunt of the trade dispute.
Current Scenario
Unlike what most economists had initially expected, China is fast adopting stances to square off America’s advantage points in this import tariff game.
In response to Trump’s proposed imposition of $60 billion in annual tariffs on Chinese products, Beijing has announced the initial $3 billion of reciprocal tariff on 128 (roughly) imports from the United States and is supposedly preparing a bolder counter-attack.
In the wake of the tariff threats, Nobel Prize-winning economist Robert Shiller has warned of an impending economic crisis.
Meanwhile, a Bloomberg report states that the United States will maintain a lead in the trade conflicts with China. This is because the United States, to some extent, is a monopsony market with a large number of buyers. Thus, if the nation stops purchasing Chinese products, China will not be able to channelize that surplus to Canada or Indonesia at the same price. However, China will not be able to adopt a tit-for-tat strategy as it does not import on the same scale from the United States.
Accordingly, following last week’s crash, the market is slowly looking up. The news that the nations are likely to resolve the issue mutually is fuelling the recovery. However, whether the talks will extinguish the possibilities of a trade war completely is yet to be seen. Meanwhile, investors are caught in the “America First” and “Made in China 2025” web.
Is Medical Device Caught in the Storm?
As stated earlier, U.S. Trade Representative Robert Lighthizer has identified healthcare as one of the 10 sectors which are subjected to the $60 billion U.S. tariff. More specifically, Trump has considered biomedicine and high-performance medical devices, which include China’s advanced chemicals and medical equipment, respectively.
Needless to say, this has triggered a decline in the sector. Following the news and with chances of China’s retaliation, losses were widespread in the Medical device sector with bigwigs taking severe blows. We note that, the sector has gained significantly from profits earned by a number of medical device companies from the BRIC nations.
Going by a Market Realist report, companies like Medtronic plc (MDT - Free Report) , Becton, Dickinson and Company (BDX - Free Report) , Abbott and others saw considerable weakness on Mar 23 as talks of a U.S.-China trade war started doing the rounds.
Although these stocks are gradually reviving on rising chances of the two nations negotiating certain terms, investors consider them still extremely vulnerable and widely exposed to the trade conflict given their huge business network in Mainland China.
We have shortlisted three stocks that are facing the brunt of the tumultuous market conditions.
Zimmer Biomet Holdings, Inc. (ZBH - Free Report) : This Zacks Rank #5 (Strong Sell) lost 6.5% on Mar 23. We note that, the company has been investing heavily to cash in on the Chinese Reconstructive and Trauma markets. Strategic investments in these regions over the past several quarters to improve operational and sales performance are yielding results. In the fourth quarter, the company witnessed improvement in its Asia Pacific business on solid distributor orders. China particularly demonstrated strong growth. Thus, any form of retaliation by China will impact the company.
Zimmer Biomet Holdings, Inc. Price
Zimmer Biomet Holdings, Inc. Price | Zimmer Biomet Holdings, Inc. Quote
Medtronic: In the last reported quarter, Medtronic’s businesses in China showed strength, growing double digits. According to the company, within the next decade, China is expected to be its biggest health care market. Needless to say, this Zacks Rank #3 (Hold) company is expending large amounts of cash to strengthen its business in this market. The company is focused on developing public and private partnerships as well as executing channel optimization strategies. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Medtronic PLC Price
Medtronic PLC Price | Medtronic PLC Quote
Over the last few years, Abbott (ABT - Free Report) has been leading the emerging market investment trend, with about 50% of total sales coming from this region. This Zacks Rank #3 stock’s core Established Pharmaceuticals Division ("EPD") business operates solely in emerging geographies, with leading positions in Chinese pharmaceutical markets for branded generics. In the last reported quarter as well, China demonstrated double-digit growth in EPD.
Trade war or not, these stocks are in an extremely vulnerable position with a broad network and diversified business base in China.
Abbott Laboratories Price
Abbott Laboratories Price | Abbott Laboratories Quote
Breaking News: Cryptocurrencies Now Bigger than Visa
The total market cap of all cryptos recently surpassed $700 billion – more than a 3,800% increase in the previous 12 months. They’re now bigger than Morgan Stanley, Goldman Sachs and even Visa! The new asset class may expand even more rapidly in 2018 as new investors continue pouring in and Wall Street becomes increasingly involved.
Zacks’ has just named 4 companies that enable investors to take advantage of the explosive growth of cryptocurrencies via the stock market.
Click here to access these stocks>>