China Brings Out The Big Guns 

As ZeroHedge reported on Thursday, “China’s Bazooka Moment” has arrived. China’s expanded stimulus measures include: 

• A September politburo meeting focused on economic measures. According to Goldman strategist Lu Sun, economics is rarely the focus of a September meeting, so this is extraordinary. 
• China issuing ¥2 trillion in government bonds (equivalent to 1.7% of its GDP), with half of those proceeds earmarked for consumption-related subsidies. 
• China injecting ¥1 trillion into state-owned backs to boost their Tier-1 capital. 

In light of that, here are four bets on China we’ve placed in the Portfolio Armor trading Substack, starting with a brief update on the one I mentioned here earlier this week. 

Four Trades That Could Benefit From China’s Bazooka Moment

Qifu Technology, Inc. (NASDAQ:QFIN). This is essentially the Chinese version of Lending Club (NYSE:LC). Our trade here was buying the $25 strike calls on QFIN expiring on January 17th for $2. Those were trading for $4.70 as of Thursday’s close, so you might want to go a little further out of the money if you are buying now. 

X Financial (NYSE:XYF). Like QFIN, X offers a peer-to-peer lending platform in China, but X also offers other consumer financial products such as insurance. We bought the underlying shares on this one at $3.95 earlier this year. It closed at $5.45 on Thursday, but probably still has more room to run with the stimulus tailwind. 

What Happens When The Effects Of China’s Stimulus End?

Each of those names should benefit at least as long as the tailwind from China’s stimulus measures lasts. 

If you think ZeroHedge’s prediction below is correct, consider exiting after PDD’s earnings in two months. 

If you’d like a heads up when we place our next trade, feel free to subscribe to my trading Substack/occasional email list below. 

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