President Trump Will Nuke Alibaba Stock If It Comes to That

Last September, a Reuters report indicated that President Donald Trump was mulling over the idea of delisting Chinese companies, such as Alibaba (NYSE:BABA) from U.S. exchanges. Keep in mind that this was before the U.S. and China signed a phase one trade deal. Further, it appeared that Alibaba stock absorbed a brief but sharp decline on the news.

BABA Stock Weakened Before the Coronavirus and Looks Worse Now
Source: BigTunaOnline /

At the time, the process of delisting stocks hailing from adversarial nations seemed unclear at best and ludicrous at worst. Of course, nothing came of the idea. But in principle, some valid points supported the case for delisting. Reuters contributors Alexandra Alper and David Lawder wrote:

In June, U.S. lawmakers from both parties introduced a bill to force Chinese companies listed on American stock exchanges to submit to regulatory oversight, including providing access to audits, or face delisting.

Chinese authorities have long been reluctant to let overseas regulators inspect local accounting firms – including member firms of the Big Four international accounting networks – citing national security concerns.

But with both economies suffering from the heated trade war and an election year coming up for Trump, the two nations set aside their differences. Naturally, Alibaba stock skyrocketed from the thawing of tensions. However, the latest developments involving the coronavirus from China will likely end its remarkable rally.

In my view, Chinese companies, from Tencent (OTCMKTS:TCEHY) to (NASDAQ:JD) to Nio (NYSE:NIO) and many others face severe turmoil. Yes, the coronavirus of course poses problems, not just in China but for the global economy.

More critically, though, I believe unresolved U.S.-China tensions will come to the forefront. If they do, the delisting proposal won’t be a joking matter.

Alibaba Stock Is the Face of a New Threat

Back during World War II, the U.S. government encouraged people to conserve resources with a simple, effective message: “When you ride ALONE you ride with Hitler.”

Perhaps the modern equivalent may be, when you invest in Alibaba stock, you invest in totalitarianism.

Admittedly, at first glance, this scenario may sound like hyperbole. But when you read between the lines, you’ll soon realize that China has been playing a very long game against the U.S. Essentially, we are incredibly vulnerable at this moment.

Also last September, U.S. national security officials sounded the alarm on our dependence on China for critical medical supplies. For years, strategists have grown uneasy that Americans rely on medicines – both over-the-counter and prescription – governed by Chinese supply chains. Further, defense agencies warned that Chinese aggression could eventually bring our nation to its knees.

Certainly, this is not hyperbole. In March of 2019, a leading Chinese economist stated frankly that “China is the world’s largest exporter of vitamins and antibiotic raw materials…Once the export is reduced, the medical systems of some developed countries will not work.” In my opinion, that’s a threat.

More worryingly, Fox News host Tucker Carlson reported that China intends to make good on this threat if it does not receive favorable treatment regarding trade deal negotiations. I don’t mean to sound alarmist. However, amid the coronavirus panic, China is threatening to put the screws on our heads.

In an interview with NBC News, retired general John Adams stated bluntly that “Basically we’ve outsourced our entire [medicinal] industry to China.”

However, I doubt that most people will stop buying Alibaba stock because of this situation. And that’s why President Trump may force their hand.

Messing with the Wrong President

It’s times like these where I’m grateful that Trump is our President. If China threatens the American people – either directly or indirectly – our Commander-in-Chief will not hesitate to fire back. And deliberating attacking China’s economy is the best way to do so without bloodshed. I hope that it doesn’t come to that. But with the Chinese sounding off arrogantly at a completely inappropriate time, we may have to ready ourselves.

Given the geopolitical narrative underlining Alibaba stock, I believe it’s best to avoid all Chinese companies. If defense strategists were extremely concerned with China’s potential disruption of medical supplies, imagine how they’re feeling now.

On another note, avoiding Alibaba stock is a way for the American people to vote with their dollars. Honestly, since the coronavirus originated in China, they should be doing their level best to help the international community. Instead, they’re scheming for Cold War 2.0.

Personally, I find this tactic reprehensible. I’m also not letting the political elites off the hook: they sold us out to the Chinese. Now, we’re left with a gargantuan challenge to correct decades-long wrongs. Fortunately, we have the right man for the job.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

©2021 InvestorPlace Media, LLC