Asia’s Best Performing Stock is China Military Expansion

Asia's Best Performing Stock is China's Military Expansion

Donald Trump wants to open a new front in his trade offensive by punishing China. For theft of America’s intellectual property rights. Trump started World Trade War by imposing a 25% tariff on steel imports as well as 10% tariff on aluminium imports. After doing this, he has been waiting for retaliation. China is the biggest culprit who has been accused of dumping the metals on American soil. However, the country has declared that they do not wish to fight America.

China can impose their own tariffs on soybean and sorghum from the United States. It is estimated that more than half of U.S. soybeans exports go to China. It is of worth US$14 billion per year. In the same way, more than 90% of sorghum also comes from the U.S. that is of worth US$1 billion last year. So, in case China thinks of hitting back then it will be American farmers, who would suffer terribly.

However, China has its own reasons to not to retaliate. Experts say that the tariffs that are charged by the US on steel and aluminium would hardly affect the Chinese. They are one of the minor steel exporters to the U.S.

China’s push to bolster its military firepower has turned a state-run aviation stock into one of Asia’s best performers this year.

AviChina Industry & Technology Co., a maker of training jets, transport helicopters and aeroplane electronics systems, jumped 40 percent in Hong Kong since the start of February through Monday as Beijing pledged to boost defence spending. That put it on top of the MSCI Asia Pacific Index, which fell more than 6 percent in that time.

Growing tensions between China and the US have renewed investors’ interest in Chinese defence stocks. Such as AviChina, according to Kelvin Lau, an analyst at Daiwa Capital Markets. Like the other 11 analysts tracked by Bloomberg who cover the company, Lau has a buy rating on the stock.

The economists are not sure whether or not the tariffs on steel and aluminium will have the desired effect on the American economy. However, the direct association of these sectors with the working class adds immense symbolic value to the decision. China is a country, with which the U.S. runs the biggest deficit, so it will be merely affected. Mr Trump has threatened to open a more intense trade war front soon. It will be going to be in intellectual property. The U.S. is acting swiftly on Intellectual Property theft. On March 7, Trump has also written on Twitter that “We cannot allow this to happen as it has for many years!”.

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