• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Technology

If Tariffs Hit, a Pullback in Chinese Tech Stocks Would Mean Buy, Buy, Buy

All of these companies would be losers from a trade war focused on intellectual property.
By JIM COLLINS
Jun 14, 2018 | 01:30 PM EDT
Stocks quotes in this article: BA, CAT, FLR, FB, GOOGL, BABA, BIDU, TCEHY, IQ

The financial media has been running with the "Trump Tariffs" story in the past 24 hours based on the assumption that the administration will announce new punitive measures against China on Friday. We'll see if that actually happens, but if there are new tariffs, the usual suspects will be affected. I've said several times in my Real Money columns that I believe Boeing (BA) would be affected most among U.S. blue chips by a "trade war". BA stock has fallen this week; I believe those concerns.

Fallen, of course, is a relative term, given the amazing run BA shares have been on in the past year, but other potential trade war victims like Caterpillar (CAT) and Fluor (FLR) are also down in this week's trading.

I think, though, the market is getting it wrong. The real battlefield between the U.S and China is not over hard goods, but soft services, and the worthwhile fight is over intellectual property rights. Chinese companies have a terrible reputation among U.S corporate managers, and that is due to IP concerns, not, in my opinion, cultural ones.

So, the losers from a trade war are not the companies that sell airplanes or backhoes or soybeans to China, but Chinese companies that use U.S. methods -- and often purloined lines of code -- to dominate the Middle Kingdom while household names like Facebook (FB) and Alphabet (Google) (GOOGL) are blocked there.

The run in the shares of Alibaba (BABA) , Baidu (BIDU) and Tencent (TCEHY) -- all of which are listed in New York, but not in China, although there are persistent rumors of the creation of CDRs, Chinese depositary receipts for local investors -- has been stunning, and I should have been on these stocks three years ago. The next wave of Chinese media companies, led by iQIYI (IQ) -- often referred to as "the Netflix of China" -- offer even more attractive user bases from a demographic perspective than the "Big 3" Chinese Internet plays

All of these companies would be losers from a trade war focused on intellectual property, and, personally, I am eagerly awaiting that prospect. I would LOVE for names like iQIYI to come back to Earth so that I could buy them and hold them for the next 20 years. That's the great thing about equity markets. The misguided overreaction to short-term non-financial events by active stock market participants can give us the keys to the DeLorean and allow us to go back in time to an era when stocks were more fairly valued.

I believe this will be the case with Chinese tech stocks if tariff headlines continue to dominate the news, and , again, I cannot wait for a pullback to buy, buy, buy and play the emergence of hundreds of million of avid consumers into the middle class.

(Facebook and Alphabet are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells FB or GOOGL? Learn more now.)

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Jim Collins' firm owned IQ.

TAGS: Investing | U.S. Equity | Technology | China | Markets | Politics | Stocks

More from Technology

Tesla's Charts Are Resisting a Downside Break

Bruce Kamich
Jul 5, 2022 1:54 PM EDT

Here's what aggressive traders could do.

Is Tesla Spinning Its Wheels?

Ed Ponsi
Jul 5, 2022 11:30 AM EDT

In addition to company-specific issues, Tesla is also fighting a tough macro environment.

EPAM Systems: Is It Time to Buy or Sell?

Bruce Kamich
Jul 5, 2022 9:32 AM EDT

Here's how I see it.

Bearish Bets: 3 Stocks You Should Consider Shorting This Week

Bob Lang
Jul 3, 2022 10:30 AM EDT

These recently downgraded names are displaying both quantitative and technical deterioration.

The Charts Point to More Selling Ahead for 4 Former Tech Leaders

Ed Ponsi
Jul 1, 2022 10:00 AM EDT

Keep in mind that no matter how much a stock has fallen, it can always go lower, and it appears these four stocks could prove that point.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 12:01 PM EDT PAUL PRICE

    A Recent Director Buy in Children's Place (PLCE)

    Four of the most recent insider trades in Children...
  • 07:34 AM EDT PAUL PRICE

    A $525,000 Vote of Confidence on Macerich (MAC)

  • 09:49 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Stop Wishing, Hoping, and Praying and Take Control...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login