President Donald Trump's visit to Beijing has sparked significant market activity, particularly in Chinese stocks and related exchange-traded funds (ETFs). Following the arrival of Trump and American business leaders, Chinese stocks experienced notable rallies, with Alibaba's shares rising 8% despite the company reporting earnings that fell short of expectations.
This surge contributed to a 2.5% increase in the iShares China Large-Cap ETF (FXI). Trading data from ThinkOrSwim indicates a strong bullish sentiment towards Alibaba, with approximately 75,000 call options purchased compared to under 12,000 put options, reflecting a preference for betting on price increases. Overall, 88% of the $160 million in options premium traded by midday was in calls.
The KraneShares China Internet ETF also saw heightened activity, ranking among the top traded securities by options volume, with over 750,000 contracts traded, predominantly in calls. Neil McDonald, CEO of Moomoo, noted a growing expectation among retail traders that improved U.S.-China relations could benefit Chinese tech stocks, coining the term 'Trump effect' in relation to Alibaba.
Additionally, Ford Motor Company shares surged 13% after a Morgan Stanley analyst highlighted a positive outlook stemming from Ford's energy-storage licensing agreement with China's Contemporary Amperex Technology (CATL). Options trading for Ford was heavily bullish, with a significant number of call options being traded.
One trader notably purchased 7,000 puts at a $16.85 strike price, betting that Ford's stock will increase by over 25% by January next year. This overall market activity underscores the impact of geopolitical events on stock performance and investor sentiment