A 'Mini Glasnost' Could Send Chinese Stocks Soaring By Sean Michael Cummings, analyst, True Wealth After the TikTok ban, thousands of Americans paid the "cat tax"... On January 19, Congress banned Chinese social media platform TikTok. The aim was apparently to avoid foreign influence and data collection. This left more than half a million "TikTok refugees" in need of a new social media site. And they soon found a new home... TikTok users flocked to another Chinese social network called Xiaohongshu (also known as RedNote). And even though the ban on TikTok didn't last long, a lot of Americans haven't left RedNote behind. Unlike TikTok, RedNote doesn't separate users by region. But the app is overwhelmingly used by Chinese nationals. More than 218 million users are Chinese... while only about 3 million active users are American. As a joke, longstanding RedNote users have "taxed" their new American friends by demanding pet pictures in exchange for use of the site. RedNote's "cat tax" may be an ironic Internet meme – but it represents a historic moment in relations between the U.S. and China. And investors need to be aware of it. | Recommended Links: | | The DOGE Agenda (Nine Stocks to Buy Immediately) Every investor in America is trying to figure out what Elon Musk will do in Washington, D.C. in the coming weeks. Now one Boston-based think tank – that has studied Musk's work for decades – is stepping forward to share what it has found. It believes his TRUE plan is far more radical than anyone realizes. It could change the way you live, work, get paid, and collect Social Security... AND could make more people rich than all of Musk's previous ventures – PUT TOGETHER. Full breaking story here. | |
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The cultural exchange on RedNote echoes another watershed moment in geopolitics... At the twilight of the Soviet Union, then-Soviet President Mikhail Gorbachev kick-started a similar cultural exchange between Eastern Europe and the West. He called the policy "glasnost." Glasnost (or "openness") was an easing of foreign relations starting in 1987. It lowered the "Iron Curtain" and allowed Western media, culture, and ideals to reshape the former Soviet Union. Right now, a "mini glasnost" is unfolding on Chinese social media. And that's likely a big inflection point for China investor sentiment. A large swath of Westerners are immersing themselves in Chinese culture through RedNote. And more are signing up. Today, the app is the No. 33 social media site on the Apple app store. As of last month, users can even translate messages in real time using artificial intelligence... so everyone on RedNote can understand each other clearly. The result is an unprecedented cultural exchange between China and the U.S... RedNote's mini glasnost will build trust and transparency between U.S. and Chinese citizens. And remember, among the TikTok refugees are high-profile influencers and communication professionals. So it's likely we'll see the effects of the exchange trickle into offline culture. This setup could be a major tailwind for Chinese stocks... If you read much bearish coverage on China, you'll likely see claims that the country is "uninvestable." Ultimately, this term is shorthand for the trust gap between Western investors and foreign businesses. Things like currency manipulation, shaky government, and lack of infrastructure can all make a country "uninvestable." But today, the trust gap is vanishing in China. And the mini glasnost will help knit China and the U.S. closer together – potentially killing the uninvestable narrative. This sentiment shift is already playing out in stock prices. We can see it using ProShares Ultra FTSE China 50 (XPP). This fund tracks a broad basket of Chinese companies. So it works well as a stand-in for the Chinese market. After a yearslong fall, Chinese stocks found a bottom last year. Take a look... Chinese stocks have been falling since 2018. But after finding a bottom in 2024, they're forging higher today. RedNote is improving American sentiment toward China. And it's laying the groundwork for a big turnaround in Chinese stocks this year. This is likely to be one of the year's biggest financial narratives. If you don't have any exposure to China, I encourage you to change that today. Good investing, Sean Michael Cummings Further Reading "If Trump does call for more tariffs, they may not bite China as hard as folks expect," Sean writes. Investors think a second Trump term will be disastrous for China's economy. But China has been laying the groundwork for months to shore up its market, and the results are already showing... Read more here. Big Tech companies are set to sink billions of dollars into a sector that most wouldn't expect. And as these companies fight to lead the future of AI, today's technological arms race is poised to send stocks in this sector soaring... Learn more here. |
Market Notes HIGHS AND LOWS NEW HIGHS OF NOTE LAST WEEK Annaly Capital Management (NLY)... "virtual bank"
AT&T (T)... telecom
Gilead Sciences (GILD)... biotechnology
Abbott Laboratories (ABT)... health care giant
VeriSign (VRSN)... domain-name provider
Sony (SONY)... gadgets and entertainment
Fox (FOX)... mass media
Alibaba (BABA)... Chinese e-commerce
Starbucks (SBUX)... coffee "World Dominator"
Gildan Activewear (GIL)... apparel
Ferrari (RACE)... luxury cars
UGI (UGI)... utilities NEW LOWS OF NOTE LAST WEEK Illumina (ILMN)... life sciences
The Trade Desk (TTD)... digital advertising
Ingersoll Rand (IR)... manufacturing
Booz Allen Hamilton (BAH)... defense contractor Tell us what you think of this content
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