Stocks That Will Be Hit Hard If Chinese Economy Collapses In 2020

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Today we chat about the stocks that will get hit hardest IF the Chinese economy collapses in 2020 or has a recession 2020. These 8 stocks would have a rough go in the short term.

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Well, howdy partner, welcome into today’s video where I’m going to go ahead and share with you guys eight stocks or eight stock categories that I think are going to absolutely get leveled if the Chinese economy really completely falls apart, which is a possibility.

It’s not anything that is for sure. But it is certainly a possibility. What we have seen over the past year is that we have seen the Chinese numbers weaken and weaken, we’ve seen the missed numbers over and over again, and a lot of people don’t even trust a lot of Chinese numbers as it is.

So if you don’t already trust them, and then they’re missing those numbers that you don’t even trust to begin with. Obviously, that’s a pretty bad sign. Right? So let’s say the Chinese economy really crashes in a massive way they go into a big recession, what are some of the stocks that will get hit the hardest?

Okay, that’s what today’s video is all about. I’m going to go into detail on some of the stocks that will get absolutely leveled, okay, doesn’t mean any of these stocks are bad stocks overall. And actually, a lot of these stocks are great long term investments.

And once the old Chinese economy comes back in, you know, they’ll do phenomenal, but let’s say the Chinese economy crashes, what type of stocks are going to get hit the hardest, guys. So that’s what we’re going to talk about here. Today, I’ll kind of go through some of these different stocks.

Some of these are Chinese based stocks. Some of these are actually a US based company. So hope you guys enjoy this. As always, make sure you hit that thumbs up button. And let’s get into this already guys. The first one is actually a group of stocks.

All right, and this would contain Alibaba. JD COMM And VIP shops, three companies that get by far and away the majority of their revenue and profits from China specifically JD COMM And VIP shop, okay, Alibaba is a little more diversified. But honestly, Alibaba at the end of the day, it’s a Chinese company who does most of their business in China.

So let’s say the Chinese economy crashes, these three stocks will get absolutely leveled. We’ve already seen over the past week or so these stocks all have gone down anywhere from between five to 10, some even 15% Alibaba has made a significant downward move, it’s come back a bit today.

But needless to say, ever since a 25% tariffs have gotten talked about and that’s, you know, something that was going to be an active, all these stocks have gotten hit Alibaba kind of being the worst the buns vipshop as well. So if the Chinese economy literally collapsed, and just you know, is a massive recession or something like that, these three stocks would absolutely get hammered. Now for a long term basis.

I wouldn’t mind this at all, although I’m an Alibaba shareholder, I wouldn’t mind if that stock dropped to a 120, a 110, or even $100 a share, because I look at this stock. And that’s a phenomenal long term investment, I think, absolutely. That will be a company worth a trillion plus dollars in the future.

So whatever happens in the short term with the stock price, you know, I kind of welcome it. But if you’re looking at long term basis, there’s a great opportunity in those guys. So that’s the first bunch of stocks is probably the most obvious because all these companies get most of their business from China.

Okay, let’s get into the second one already, guys, the second stock of the bunches of one stock in particular, and that is Apple Corporation. Obviously Apple does business all over the world. Okay. Mostly US based, obviously, but also Europe, in China’s a massive, massive market for Apple right.

Now, what we have seen for Apple overall is we have seen Apple this past year, pretty much all their numbers they have missed, or all the growth they pretty much can’t get is because of China, if you look at their their weakness out of China, it is pretty much 100% because of China is why Apple has not been hitting their numbers.

And basically why why Apple’s just you know, basically, their business is shrinking overall, if China numbers were just like the same year over year, essentially, like like Apple would be in a position where they actually be, you know, basically a stagnant business right now, or at least slightly growing their business rather than a business that is shrinking, it is 100% because of China.

So if China gets a lot lot worse, you’re going to be looking at a situation where there’s not going to be a lot of people paying 1000 plus dollars for iPhones. Keep in mind, the iPhone is even more expensive in mainland China than it is in the States. Okay, so you think about some of the highest end iPhones, right? We’re thinking about 1000 plus dollars in the States.

Now imagine how expensive that is to the Chinese. All right. And keep in mind, you know, the Chinese, on average are making far less money than American makes, right? It’s just, you know, extremely significant portion less, okay, if you’re in China, you know, a good salary might be 10 or 15,000 a year, right.

And in the United States, we’re talking about 50 $60,000 so it’s a massive, massive difference. And so $1,000 iPhone is a dramatic difference. So if the Chinese economy continues to weaken and a substantial way look for Apple numbers to continue to get weak now once again, this is all short term stuff.

So it would push Apple stock price down in the short term, maybe $150 maybe $140 somewhere in there, but if I’m looking at Apple’s business over the long term absolutely love that business and when China does come online whenever that is obviously Apple would be a huge benefit in China Okay, so that stock number two, let’s get into stock number three already guys, a third group of stocks are actually the casino operators.

Okay. Wynn resorts, Las Vegas Sands and MGM. All three of these stocks if the Chinese economy got a lot worse and actually went into a big recession, these three stocks would all be hammered pretty hard. Okay, all three of these companies get significant portions of their revenue in their profits from the Macau region.

All right, Wynn resorts being the most reliant on the Las Vegas Sands being the next and then MGM kind of being the least, but even MGM still has a lot of their profits are coming from the Macau region, a lot of their revenue is actually still coming from the Macau region. So if we look at a Chinese economy that continues to weaken, there’s not going to be a ton of people just going out there and spending money like crazy and gambling like crazy at these casinos.

Right? In wins case, it’s the high end players and if we’re looking at a big economic slowdown, I doubt the player that plays for $10 million in a given weekend because they’re big High Roller at a win at a wind property right I doubt if all sudden their net worth is shrinking play millions of dollars a day or you know 10s of millions of dollars a day because the economy continues to crash and their business is going downhill.

I doubt they’re gonna want to go to win and gamble $10 million, okay, or a million dollars or 100,000 or whatever it is that player goes in has done on a regular basis and an economic collapse or big recession that just doesn’t happen so all three of these businesses could be hurt in a substantial way and their properties could go from actually you know making them lots of profits to actually losing them money at least in the short term.

Okay, so those three stocks could all get hit very hard we saw when stock back when you know Macau got very weak we saw that go down to about 50 bucks a share that was just a few years ago before when palace open when Macau got really weak okay when stock by the way in the last recession was like a 30 something dollar.

Stock now i don’t think even in a big recession in the future when could go down that low simply because they have more properties now those properties generating money the company is just worth a lot more money. But still this is a stock if Macau got super super weak, you could see it back in you know a $70 range again or $1 range but once again that’s that’s you know.

If things really went downhill so the casino operators all then would get hit very hard. Let’s get into the fourth one already guys a fourth with a bunch Not a lot of people even think about this one in the actually their their reliance on China. And it is Starbucks Corporation.

Okay, Starbucks, very similar situation to Apple where Starbucks has relied on China for showing a lot of their growth numbers. Starbucks has 1000s upon 1000s of stores in China, okay. And these are usually 100% owned by Starbucks. All right. So let’s say the Chinese economy got really weak.

And let’s say you know, the Chinese people in general are kind of looking at America is America’s fault for this and whatnot. Starbucks probably not going to be in a very good position. Because if America is hated by the Chinese, because they you know, the Chinese believe America could collapse their economy or something like that, or sent them into a big recession.

They’re gonna look at American brand like Starbucks and say, why would I want to go through, you know, get a $5 cup of coffee, or $6 you know, frappuccino at Starbucks in a time where you know, every dollar counts or something like that, right? So when you’re at Starbucks situation, a company that has gotten so much of their growth, a company that now has.

I heard something like maybe 8000 stores, I’m not going to 100% confirm that. But I heard something about 8000. Starbucks now in China, or some insane number. Imagine if those same store sales start to go down and down and down. We’ve seen it where Starbucks you know, same store sales have basically gone from great growth to almost like flattish, pretty much overnight measure.

If those same store sales start going down, you know, 3% 5%, so on and so forth. And it starts to get really ugly for Starbucks, that’s gonna send their stock down in a massive, massive way, because it went from a growth market, something that you were bullish on for Starbucks overall, to all of a sudden, something that actually starts dragging the business down.

And also Starbucks start thinking, should we even expand more in China? Should we start cutting back stores and things like that? Okay, so Starbucks is absolutely a stock that I think could get hit very, very hard if the Chinese economy, you know, continues to weaken, and was to actually go into a big mass recession or something like that, guys, no, no, not one, you know, a lot of people are thinking about, but absolutely.

They’re become more and more reliant on China over time. All right, let’s get into number five already guys, a fifth stock here that could get hit very, very hard if the Chinese economy went into a big recession, wouldn’t be Nike stock, okay, Nike, another obviously famous American brand, right?

Chinese economy collapses, Chinese economy goes into a big recession, you know, let’s say USA is blamed for that, once again, not in a great position to be an American brand selling in China in Nikes, another business that has relied on China for a lot of their growth over the past five or 10 years, okay? The Chinese numbers have gotten bigger and bigger and bigger.

And now other than obviously, the states and obviously the other than Europe, China’s their next biggest markets, their third biggest market now. So you’re talking about a business right here that so much of their growth is so reliant upon how the Chinese business does, and I’m just going to go out there on a limb and say, you know, false in the Chinese economy was to get much much worse.

I doubt everybody’s running out to go buy a brand new pair of Nikes Okay, especially in economics. situation like that, right? Everybody’s going to keep whatever shoes they have in though that type of situation, or they’re going to try to go to a cheaper brand Nikes a more premium brand in the shoe space, obviously.

And so if I’m looking at Nike, I’m seeing a business that you know will be hurt very bad if the Chinese economy continues to fall and I see a business that honestly the stock at least that will get absolutely hammered. If the Chinese economy continues to get worse guys.

That’s stock number five, let’s get into number six already guys, stock number six of the bunches of corporations some of you guys may have never heard of it is an otherwise known as tapestry company. Okay, who does tapestry company own they own brands like coach brand, you might know coach purses, you might have bought one for somebody in the past, you might actually own a car coach purse depending on who you are.

And also Kate Spade, another very popular brand that sells purses and wallets and those sorts of things. Okay, tapestry company, once again, this is another company that is very reliant on the Chinese market this particular time, okay, very market, that a company that’s very reliant on how the Chinese consumer is doing overall, specifically, kind of the Chinese consumers that are making, you know, a 30k plus per year.

Which there’s a limited amount of people that are making you know, 30,000 American dollars essentially worth per year plus, okay, in China, that’s essentially the market that a company like tapestry is going after. So let’s say these folks that are making 30k plus per year that their incomes also dropped, they’re also you know, are unemployed, or they have to get a job that’s paying 20k Plus.

Also, now they’re not in such a significant, you know, a way that they can also buy, you know, a new coach purse for $300, a new Kate Spade Wallet for $150 or something like that, right. And some of those products are actually more expensive in China than they are here in the States.

Okay, so if you’re looking at another company like tapestry if if a big recession hits China, and once again, not a company that people are just you know, running out to spend money at it, you’re seeing something in common, you know, obviously these a trait Chinese plays, well, Apple very, you know, the highest of the highest and smartphones people aren’t running out to spend money on that.

And in times of, you know, hard times, when in these type of places, people aren’t running out to go gamble money in hard times, Starbucks people aren’t running out to spend $6 on a cup of coffee, you remember the Chinese you know, historically, I’ve not even really been coffee drinker, something’s just keep in mind there, Nike tapestry, these brands are all very premium brands, high end brands, and are great brands overall.

But in times of, you know, economic weakness, where their products are priced at the highest dollar, either these companies all have to cut prices substantially which ends up eroding margins, or that but you know, keep their pricing and keep their brand and just watch sales kind of not come in essentially at the end of the day.

Okay, got two more stocks to get into. Let’s get into number seven already. Guys, stock number seven are the bunches actually a group of two stocks here, General Motors and Tesla right now for two very different reasons. General Motors is very reliant on the Chinese economy and people buying, you know, General Motors products over there, okay, they have a ton of joint ventures they’ve done and they’ve become more and more reliant on their Chinese numbers over time.

So they’re already putting up very nice numbers in China over the past few years. And you know, the GM has called this out several times in the past on conference calls and whatnot, a lot of our weak are a lot of our strength is from China and the China region, okay, Chinese economy falls off the rails, once again, not everybody’s running out to go buy new cars, right.

And then Tesla’s for a very, very different reason. Tesla’s a lot of the growth is, you know, expect in Tesla is because of the Chinese region. We know the Shanghai factory is getting built right now and have you know, breakneck speed. Okay, Shanghai is getting built that factory that should be opening at some point toward the end of 2019, worst case scenario, maybe beginning of 2020.

And, obviously, there’s a ton of, you know, Tesla demand that’s pent up there that is expected to come through. Now, the Chinese economy also goes in a big recession. Now everybody’s running out to go spend 40 5060, you know, maybe 70 or $80,000 on a new Tesla at that specific time.

Okay, so GM and Tesla were two companies that could be hurt very bad if the Chinese economy really goes off the rails GM because they’re already getting numbers and their numbers would be hit. And then Tesla because the growth that was expected to come when the when that Shanghai factory gets up and running in full production.

If that doesn’t come then all sudden you you’re stuck there with like, you know, trying to count on growth of in North America in Europe, which are markets we’ve seen, you know, some weakness in growth, at least in recent quarters. Okay, so GM and Tesla could absolutely be stocks, they get hit, you know, much, much harder than they’ve already been hit.

If the Chinese economy weakens even worse, and let’s into the last one, number eight already, guys, our last one number eight of the bunch is Caterpillar, Caterpillar makes construction equipment, some of the biggest industrial equipment you can possibly imagine. Right? And they’re one of the biggest providers of this.

So Caterpillar is someone that has benefited huge from basically all the building that has gone on in China over the past decade. All the cities that have been built all the mining that has been done in China, all those sorts of things. Tons of those orders have been placed for Caterpillar equipment.

Okay, and Caterpillar has benefited huge from this for basically a decade right? Now on the flip side, imagine the economy goes really bad, you know, all this infrastructure building, all the housing demand starts to slow down Caterpillar is not needed out there and things like that, right?

That obviously would be something that would dramatically hurt caterpillars business and all sudden they they, you know, get much more basically reliant on the US market in the European market overall. Okay, now the good thing with Caterpillar is we do know, there’s probably going to be a huge infrastructure bill in the United States that comes within the next, let’s say, a year or two.

I mean, I would be surprised if it doesn’t, it’s possible it doesn’t. So the good thing is when that massive infrastructure build does come, hopefully within the next year or two in the States, that should benefit caterpillar. But still, if the Chinese economy got really ugly, and you know, all those massive amounts of orders start, you know, kind of stopped in place, basically, overnight, or just over time in general.

You know, remember, Caterpillar sells, you know, most of the equipment they sell, or hundreds of 1000s of dollars, or millions of dollars. So also an order starts to dry up that’s, you know, significant amounts of money that basically just starts being cut from Caterpillar over time.

And that’s a stock that people would flood out of, and that’s a stock that could fall, you know, if the Chinese economy got super, super weak, that’s a stock that could easily fall to a 60 or $70 level if the Chinese economy got really, really ugly, okay, we’ve seen Caterpillar down there in the past, it would go back down there again, right now it’s 120 something dollar stock.

So it could easily take a 40 or 50% haircut if the Chinese economy got really ugly, guys. So those are some stocks here. These aren’t the only stocks we can we could spend all day going through different stocks that would be hit, you know, in a significant way from the Chinese economy or just a little bit from the Chinese economy.

If they got really weak and whatnot. But these are some of the most direct plays that got would just absolutely get devastated. Let me know if you guys ever want me to do a video on companies that are almost non existent reliant on China. I could do that at some point in time.

Let me know in the comment section if you’d like that, let me know what you thought about today’s video. Hope you guys got a lot of value out of it and make sure you smash that thumbs up button. Alright, thank you for watching. Have a great day.

 

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