Since China launched a series of stimulus measures, US-listed casino and copper stocks have performed exceptionally well. A research company is suggesting investors consider buying these stocks.
Adam Parker, CEO of Trivariate Research, indicated that traders should focus on US-listed stocks that have seen significant gains recently and are typically correlated with Chinese-listed stocks. He noted that casino or copper mining stocks might be the most meaningful choices.
In a recent client report, Trivariate highlighted the performance of these sectors since China implemented new stimulus measures. The materials and industrial sectors have been the best-performing sectors in the US market during this period, with Freeport-McMoRan (FCX, Financial) up 10.6% and Southern Copper up 9.1%.
Casino stocks have also shown impressive gains, including Las Vegas Sands (+19.5%), Wynn Resorts (+19.5%), and Melco Resorts & Entertainment (+29.8%), all of which have offices in Macau.
Parker advised in his report that due to relatively low profit expectations and sentiment, it is wise for investors to increase their exposure to these companies. He explained that using the initial market reaction as a gauge for future positioning is sensible, as market performance is different from the past when China introduced economic stimulus.
Parker noted that historically, not all Chinese stimulus measures have impacted the US stock market, especially when these measures coincided with other significant events in the US market. On average, these measures haven’t brought particular benefits to the US stock market, possibly due to other concurrent factors.
However, Parker is optimistic this time. He mentioned that some investors had been waiting for such a stimulus plan for several quarters, and the unexpected timing last week led to the conclusion that this intervention would gradually benefit the US stock market.
