Huawei/SMIC Plus One, Boeing Plus One

Easing of U.S.-China trade tensions is good for everyone

The tit for tat of the U.S.-China Trade War / Tech War could go either way. This turns into a mutual compromise once a while, like what’s happening now.

Both SMIC and Boeing are worth trading, given so much U.S.-China risk is priced in already and now these companies get a break.

This is not to say that the worst is over.

There is surprisingly very light reporting of U.S. Commerce Secretary’s visit to China last week. No biggie, as it seems. However, I see some small but meaningful changes.

First, Gina Raimondo’s trip confirms that the U.S.-China trade relations have shifted from common / agricultural goods to more tech / industrial products. Here is a reminder of how primitive the Trade War used to be during the Trump era.

Since then, the Biden administration has turned the Trade War into a chess game of technology competition. This culminated in the most severe sanctions on Chinese semiconductors in October 2022, by the very Department of Commerce (DOC).

Second, in terms of stocks, a handful of companies are at the tip of the spear always. Huawei (unlisted) and SMIC (0981.HK, 688918.SH) from China, and Boeing (BA) on the U.S. side.