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U.S. President Donald Trump is making some big decisions regarding WeChat, the Chinese multipurpose messaging, social media, and mobile payment app that has exploded in popularity over the last few years.
Released in 2011, it became the world's largest standalone movie app in 2018 - boasting over 1 billion monthly active users.
And it has been making headlines lately following President Trump's recent focus on the app, threatening to ban its use in America.
Users of the app haven't responded well to this news, since many depend on it as their only way of communicating with family and friends in China. But this ban wouldn't only impact relationships; it could pose a significant issue for U.S. companies.
The executive order, which was issued last month, would ban U.S. businesses from "any transaction that is WeChat-related" as the Trump administration believes that the app poses a national security risk.
Now, the order specifically targets the usage of the app stateside, but its broad wording leaves room for expansion. If the ban goes beyond the states, it could restrict all U.S. entities from using the app, whether they're located in the U.S. or overseas in China.
And that becomes a massive problem for businesses that actually do operate in China. And I'm talking big-name firms like Starbucks Corp. (NASDAQ: SBUX), Walmart Inc. (NYSE: WMT), and Nike Inc. (NYSE: NKE) - as the ban could cut off the line of communication customers use to purchase their products.
To put this into perspective, last year, Walmart noted that 30% of its transactions in China came from its "Scan and Go" app, which is a program that's embedded into WeChat.
And Nike noted that it saw significant momentum from digital partners like WeChat, as well. Bottom line, this ban could be a wrecking ball for American businesses. So, if I could sum it all up into one word, I'd choose uncertainty - but you don't have to be uncertain about your investment.
So today, I'm going to show you how you can play this developing situation to not only protect your portfolio, but to also make some profit...
Turn This Ban to Your Benefit: Where's the Money?
WeChat is the latest addition to a rather long list of companies that President Trump is looking to shut down or restrict due to privacy concerns.
But the problem with this move is that it could backfire quickly if China in turn doesn't allow U.S. companies to do business there anymore. And like I said before, the impact on large, household name-level companies could be unimaginable. I'm talking names like Apple Inc. (NASDAQ: AAPL), Las Vegas Sands Corp. (NYSE: LVS), the stocks I mentioned above, and more.
Now, how would I play it? I personally believe that stocks from China have a ton of growth potential, so I'll be looking to keep my money there.
But the two stocks that have recently caught my eye for playing this specific situation are Xtrackers Harvest CSI 300 China A-Shares ETF (NYSEArca: ASHR) and KraneShares CSI China Internet ETF (NYSEArca: KWEB). Both of these ETFs are showing immense upside - and I believe once the ban hits, people will be flocking over to them, trying to get a piece of these stocks.
So, get ahead of the masses and not only protect yourself, but play the upside and profit. Your future self will be grateful you did.
Before You Go...
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About the Author
Andrew Keene is a globally known trader and a renowned expert on all things options.