S&P 500 went down 6.58% during the last month
The new tariffs on Chinese products were proclaimed by President Donald Trump at the beginning of May. It was the trigger for the correction on stock markets in May. Another reason for the May sell-off was the extension of the trade war on the technological front. Trump’s banning of Huawei could be a sign of worsening relations between China and the United States. Later, Google suspended Huawei’s access to the Android operating system.
My comment on Alphabet and Facebook
Google services have been blocked in China since early 2011. However, profits from advertising in Europe could go down as the new Huawei devices will not use Google services. As a consequence Apple and Samsung will sell more smartphones in Europe.
My biggest position is doing well this year. Facebook went up 35.38% in 2019. I think the current sell-off of 10% from the April price created a buying opportunity.
Facebook is banned in China. No presence in the Chinese market means that the response of the Chinese government will not affect the profits that Facebook makes.
Additionally, Mark Zuckerberg, the founder of Facebook has been planning a launch of a cryptocurrency for Facebook’s social networks. It is another reason to be bullish on the Facebook company. It is how Alibaba and Tencent dominated the mobile payments system in China.
To remind you, more than 2.5 billion people have used at least one of Facebook’s apps: Facebook, Instagram, WhatsApp or Messenger.
One of my commodity positions was noticed by dividend investors. From the time of buying on the 20th February, the Gazprom stock price went up 43.98%. It was the reaction of investors after the company surprised the stock markets with a proposal to hike the 2018 dividend to 16.61 rubles per share, up from a previous proposal of 10.43 rubles. Its At dividend yield is 7.7% at the current price.
Most of the revenues of Alibaba come from Chinese market. Most of the revenues of the company will not be affected by the United States vs China conflict. But the continued trade war can have the impact on the European business of Alibaba. The growth of its cloud computing business in Europe may slow down as there is a risk of Alibaba Cloud being banned in some European countries.
It is difficult to estimate the impact of the trade war on Tencent’s gaming business. My position in the company is small. It is only one-third of what I invested in Alibaba. My reason for holding a position in Tencent is its WeChat app which is China’s everyday mobile app. WeChat is what Facebook would be if there were no privacy restrictions in Western world countries. It is known as the equivalent of WhatsApp plus Facebook plus PayPal plus Uber plus many other things.
Please note I am not a regulated financial advisor and so any help will be non-advisory. If you are unsure of the suitability of any investment you should seek professional financial advice.