Trade War Fears Rife: Likely ETF & Stock Winners And Losers
Zacks Investment Research | Mar 15, 2018 01:38AM ET
Reinforcing his protectionist agenda, President Donald Trump sought to levy new tariffs worth up to Trade War Talks Heat Up: ETFs & Stocks in Focus ).
Naturally, companies that have extensive trade relations with China might face the brunt of a trade war. Technology chip suppliers selling products to manufacturers in China will also be dealt a heavy blow. In fact, Goldman Sachs (NYSE:GS) compiled some companies with considerable revenue exposure to China.
Let’s take a look at those companies and the related ETFs.
Likely Stock and ETF Losers
Industrial
Boeing
China is a key market for Boeing Co (NYSE:BA) where it serves as the largest exporter of America. Last September, the company said that it expects China to spend about $1.1 trillion over the next 20 years, purchasing more than 7,200 airplanes. The Chinese government has indicated that it might order Airbus in place of Boeing jets if the United States spoils its trade relation with China. Shares of Boeing fell 2.5% on Mar 14.
Industrial ETFs like iShares U.S. Aerospace & Defense ETF (HM:ITA) , SPDR Dow Jones Industrial Average (SI:SPDR) ETF (V:DIA) and Industrial Select Sector SPDR Fund XLI are highly invested in Boeing and could thus be hit hard.
Technology
Skyworks Solutions Inc (NASDAQ:SWKS)
The company, which makes highly innovative analog semiconductors, has SOXX (around 3.8% weight).
Qualcomm (NASDAQ:QCOM)
The leader in 3G, 4G and next-generation wireless technologies has 69$ revenue exposure to China and has exposure in ETFs like SOXX (about 6%).
NVIDIA Corp (NASDAQ:NVDA) NVDA
This semiconductor company is 56% related to China and is heavy on ETFs like Global X Robotics & Artificial Intelligence Thematic ETF BOTZ (about 9% focus) and SOXX (about 8% focus).
Other tech and semiconductor companies include Intel Corporation (NASDAQ:INTC) 22% to 55% to China.
Consumer Discretionary
Wynn Resorts Ltd (NASDAQ:WYNN)
This owner and operator of casino resorts has 64% exposure to China. The stock has around 5% focus on each of PowerShares Dynamic Leisure and Entertainment BJK .
Likely Stock & ETF Winners
Small-Cap Retail & Technology
Since Trump’s tariff plan will take consumer goods into consideration, small-cap apparel, footwear and toys companies are likely to benefit, which do not have much foreign exposure. PowerShares S&P SmallCap Consumer Discretionary Portfolio BOOT and Xcel Brands Inc (XELB) may benefit from the import tariff.
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There is a small-cap technology ETF for investors, namely, PowerShares S&P SmallCap Information Technology Portfolio PSCT . As far as stocks are concerned, Comtech Telecommunications Corp. (NASDAQ:CMTL) and Stoneridge Inc. (NYSE:SRI) are some of the companies one may consider.
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