Yahoo Finance

Well, US stocks of course taking a beating as investors assess the impacts of the tariff escalations with China. But let's talk about pockets of investing opportunities on the Chinese side. We've got Crane Shares, Chief Investment Officer, Brendan Hearn, joining us now. Brendan, um as we watch K web, your ETF very closely. Um, it's actually up a little bit still on the year. Um, we've seen some standouts, the likes of Alibaba for example, but what happens now now that these huge 145% tariffs have been imposed?

Yeah, I think the, there's a little bit of a, unfortunately we're stuck in this tit-for-tat retaliation. I think ultimately, the Chinese government is taking the view that less than 3% of their GDP is represented by US trade with the United States versus 70 to 80% of the US economy is dependent on consumption. So, so I think China is going to be much more focused on raising domestic consumption. There's a lot of talk about coming domestic consumption stimulus. That might actually come overnight. There's some rumors there. I think China is basically saying, you know, we're just going to focus on what we can control. And if the US wants to cut off access to our products that affects the US then maybe it affects China.

Brendan, correct me if I'm wrong, um, because I often am, Brendan. But I feel like last time we spoke, were you in the camp that believed, listen, at the end of the day, there is going to be a grand bargain made here between Trump and Xi. Am I right about that, Brendan? Was that your position? If it is, is that still your position? And what do you think the outlines of such a bargain could actually look like?

Yeah, I mean definitely we thought, you know, President Trump is a successful business person, that this is the art of the deal that he's expressed, that he has a personal relationship with President Xi. Close advisors like Elon Musk are heavily exposed to China's economy and know China. Well, so we thought, you know, there's a real recipe for a mutually beneficial deal to take place. I think other advisors in the Trump administration recommend taking a very hard stance out of the gate with these exceedingly high tariff levels which, you know, really again, I think, I think it's probably surprised the China side, but now that they know what hand has been played by the administration, I think they'll make a pivot toward domestic consumption knowing that these tariffs really hurt the US consumer, potentially far more than it hurts the Chinese economy. You know, you know, maybe this tactic from, you know, really I think promoted by certain advisors within the administration backfires on the US. Obviously you've seen the reaction in the US equity market. It's a very costly economics 101 lesson with trillions of dollars of US wealth lost and instigating a trade war when they could have gone about it in such a different fashion.

And so, are there Chinese companies that you think are sort of better positioned while all this is going on?

Well, I mean it's self-serving and highly biased, but you know, I love the companies we hold within, within K web because they're geared to the US, Chinese domestic consumption story. They basically have no revenue to the United States. Um, I would caution that, you know, there's rumors that does the administration try to put pressure on China by talking about ADR delisting? For that reason, you know, we've really converted the vast majority of our K web holdings to the Hong Kong share class where, you know, it's something that, that we did a while ago, but I think investors, it's something that we're hearing talk about, you know, do they go after it? But again, you know, again, this, we've seen trillions of dollars of US wealth hurt by this tariff policy. The US ADRs are held by US investors. If you delist them, you do not hurt China. You hurt US investors. It's just, it's really hard to explain some of the things that we're seeing out there.