Posted November 28, 2022
By Zach Scheidt
The Chinese Are Sick of COVID. Here's What to Do…
Mass protests broke out across major cities in China over the weekend. The problem?
Chinese citizens are sick and tired of draconian lockdowns that are now more dangerous than the virus they’re supposed to suppress.
In the Xinjiang region, for instance, the Wall Street Journal reports citizens have been on lockdown for more than 100 days.
And when a fire broke out, 10 people died because of slow emergency response times affected by COVID restrictions.
Meanwhile, COVID cases continue to spike across the largest Chinese cities.
Today, Reuters reported the fifth straight day of record new COVID cases in China. And it’s clear that the official statistics are conservative at best.
So what next? Will the protests be squashed, or will the Chinese government bend, leading to fewer restrictions for the masses?
And how will the developments affect your investments? Let's take a look!
China Must Back Off
If these protests had occurred 10 or 20 years ago, China's censorship police could have contained the situation fairly easily.
But in today's information age, even the internet restrictions China put in place can't keep the world from seeing what’s happening.
And as images of Chinese citizens taking to the streets spread, China's policymakers are being forced to make adjustments.
It's hard to know exactly what will happen from here. But one thing is sure…
The draconian lockdown policies must go. Otherwise, China will face a full-scale revolt against the government.
Maybe China's policymakers will accept help from the rest of the world, importing vaccines and therapeutics.
Maybe the number of new cases will be allowed to rise while China races to expand the country's medical infrastructure.
But it is clear that locking residents in their homes for months at a time is no longer an option. This is good news for the freedom-loving people of China.
It's also very good news for the global economy. And it creates some new opportunities that you can profit from if you invest right away.
Preparing for China's Reopening
Now that China's protests have been thrust onto the global stage, China will have no choice but to reopen large cities and major areas of their economy.
And while China's economy has been in a bit of consolidation lately, a reopening could trigger a huge amount of economic activity.
This may be bad news for inflation, because more demand will drive prices for goods, services and raw materials higher.
But it's good news for companies that produce these raw materials that are in high demand. Take oil and natural gas producers as an example.
As Chinese citizens go back to work, start visiting relatives, and live normal daily lives, Chinese fuel consumption will increase sharply.
The world is already dealing with an energy crisis. And a Chinese reopening will simply add more demand to the lopsided oil and gas market.
Watch for oil and gas prices to shoot higher soon, which is great news for many of the energy stocks we cover here at Rich Retirement Letter.
Meanwhile, demand for industrial metals like steel and copper will surge.
These metals are needed for infrastructure projects, manufacturing and major players in the oil and gas industry.
Buying stocks like BHP Billiton (BHP) and Rio Tinto (RIO) can help you capitalize on this surge in demand.
Many people will initially start buying Chinese tech stocks. But I would caution you against this move.
Some of the most popular Chinese tech stocks are overvalued compared to the profits they generate.
And Chinese regulators don't use the same level of scrutiny that U.S. investors are used to seeing. So the profits, balance sheets and other information you research may not be accurate.
The best play is to own international companies that will benefit from a rebound in China's economy. And raw materials stocks offer a great starting point to lock in your profits.