China is Coming After U.S. Companies — Is Your Portfolio Exposed?

by Andrew Zatlin

Last week, Apple released its new lineup of products…

And its market cap fell by nearly $200 billion!

Has Apple lost its touch?

Today, I’ll reveal what’s going on here — and explain why it impacts not just Apple, but your overall investment portfolio, too.

For a transcript of this video, see below. This transcript has been lightly edited for length and clarity.

China is Coming After U.S. Companies — Is Your Portfolio Exposed?

China is playing a high-stakes game of Jenga with the U.S. stock market.

It’s deliberately going after some of America’s top companies, starting with Apple (AAPL).

What’s going on here? What companies are next? And what does this mean for your investments?

I’ve got the answers for you…

A Rival Smartphone

Let’s start with what triggered Apple’s slide.

Perhaps surprisingly, it was due to the release of a new smartphone.

But I’m not talking about the iPhone. I’m talking about a phone created by a company called Huawei Technologies.

Huawei is China’s largest telecommunications company. And trust me when I tell you that this company is closely connected with the Chinese government.

It’s widely suspected that Huawei equipment is used to spy for the Chinese government. In fact, Huawei products are banned in the U.S.

Essentially, this company is merely an extension of China’s government. And last week, it released a smartphone that raised more than a few eyebrows, including mine…

It’s an Arms Race

You see, there’s an arms race going on right now, specifically with respect to semiconductor chips.

China doesn’t like that it needs to rely on other countries for these chips. So it released a new phone (through Huawei) with some unique features.

For example, this new phone doesn’t run on Android or iPhone’s ecosystem. It uses a homegrown operating system. Additionally, the semiconductor chip in this phone is manufactured in China, a surprising development considering the U.S. has worked hard to prevent the technology used in these chips from winding up in Chinese hands.

With this phone, China is essentially flipping the bird to the U.S. and Apple.

Friends No More?

I’ll admit, the move against Apple seemed strange. After all, China and Apple have had a profitable relationship for years.

Apple doubled down on Chinese manufacturing and invested more than $300 billion into its economy. It created millions of jobs there and helped the country become a world leader in manufacturing.

Now, however, Apple has big problems. Not only are 95% of its products made in China, but Chinese consumers represent 20% of Apple’s customer base. With the release of this new Huawei smartphone, China is coming after Apple in a big way.

And that’s not all…

The creation of a rival phone stunts Apple’s growth to some degree. But forcing this new phone on consumers takes the deviousness to another level.

Chinese government workers can no longer buy iPhones. And lately, China has used social media to push down the iPhone and promote the new Huawei phone.

Don’t Mess With China

So, why is China so hellbent on going after Apple?

China is in the midst of a trade war. And it’s faced challenges of its own with respect to getting its economy back on track following COVID.

Backed into a corner, so to speak, China is letting the world know that it’s not to be messed with, and that it’s ready to come after anyone who gets in its way…

Which brings me to why this story matters so much to investors like you.

You see, Apple isn’t the only company that’s exposed to China’s increasing urge for a fight. And if it can strike a blow to one of the world’s biggest tech companies, you can bet that other companies are in trouble, too. The key is to identify which ones are most at risk…

Is Your Portfolio Exposed?

I read recently that if China stopped buying all U.S. goods, S&P 500 earnings would fall 7%.

At first blush, that doesn’t seem like a catastrophic number. But keep in mind that a lot of companies don’t do any business with China. That’s why the overall number is so low.

That being said, more than a few do extensive business in China. And these are the companies that are exposed. For example:

  • Twenty-five percent of Nvidia’s (NVDA) revenue comes from China.
  • Twenty-three percent of Tesla’s (TSLA) revenue comes from China (and rising).
  • And thirty-five percent of Broadcom’s (AVGO) revenue comes from China.

Do you own any of these companies in your portfolio?

If so, you might want to think about selling.

At the same time, consider scooping up shares of companies that aren’t reliant on China that may provide shelter as this trade war ramps up.

If you’re a Moneyball Pro subscriber, I’ll reveal the one move I’d make today.

We’re in it to win it. Zatlin out.



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