The growing trade dispute between the US and China is probably the biggest threat to our stock market, but there is a S & P / ASX 200 stock (Index: ^ AXJO) (ASX: XJO) that seems well positioned to benefit from tension. This company is Lynas Corporation Ltd (ASX: LYC) which operates in rare earths and the price of LYC shares is outperforming many of its peers with a gain of 0.5% to $ 2.01 during the lunch break when the materials sector is flat as BHP Group Ltd (ASX: BHP) share price and the share price of South32 Ltd (ASX: S32) fell in red. US President Donald Trump's decision to put Huawei on …
The growing trade dispute between the US and China is probably the biggest threat to our stock market, but there is one S & P / ASX 200 (Index: ^ AXJO) (ASX: XJO) stock that seems well positioned to benefit from the tension.
This company is a rare earth miner Lynas Corporation Ltd (ASX: LYC) and LYC's share price is outperforming many of its peers with a 0.5% gain at $ 2.01 during the lunch break when the materials sector is flat as BHP Group Ltd (ASX: BHP) share price e South32 Ltd (ASX: S32) The share price collapsed in red.
US President Donald Trump's decision to put Huawei on a "black list" that would prevent US companies from supplying products and technology to Chinese telco equipment manufacturer is helping bull sentiment towards Lynas.
How Huawei's crisis is helping Lynas
Bloomberg reports that Google is considering the possibility of interrupting software support to Huawei (outside the open source operating system for mobile phones) as a result and the world is watching to see the response of China's revaluation.
It does not seem like an agreement to end the tariff trade war between China and the United States is receding, and this is bad news for global growth even though Lynas's unique position as supplier of rare earth minerals could keep the price of its outperformance shares.
The miner is the largest supplier of rare earths outside of China and I don't think the world can afford to drop Lynas while trying to get the support of the Malaysian government to keep its Kuantan plant in operation.
Lynas' JV plant in the United States
Lynas has signed a joint venture agreement with Blue Line Corporation, based in Texas, to build another plant in the United States, while continuing to negotiate with the Malaysian government concerned about the radioactive waste from the plant.
The United States would be keen to see Lynas succeed as China could reduce the supply of rare earth to US producers. Rare earths are used in a wide range of electronic components such as memory chips, rechargeable batteries and motor magnets.
The critical industries of military and electric car manufacturers need rare earths to manufacture products and China has a history of using its position in the rare earth market to "punish" other countries like Japan during disputes.
I suspect that the Malaysian government will be actively pressured by other nations to allow Lynas to continue operating its plant in that country while the US ASV miner's US JV plant will be the only large-scale plant at world capable of separating medium and heavy rare land products outside China.
Rare earths may not be rare (in reality they are reasonably easy to find), but it takes time to develop mines and processing plants. Lynas has an important advantage and a strong market position.
Even if China and the United States were able to reach a trade agreement, I think the way the world sees rare earths, and Lynas by extension, has changed permanently.
An ASX stock for an estimated market of $ US22 billion in marijuana
A little-known ASX company has just unlocked what some experts believe may be the key to profiting from the coming marijuana boom.
And make no mistakes, it's coming. For an estimated amount of $ US22 billion.
The legalization of cannabis is spreading throughout North America and full legalization has arrived in Canada in October 2018.
Here's the best part: we think there is an ASX stock that is in a unique position to take a huge advantage of this new explosive industry … bringing with it experienced investors for what could be a real spin.
And, this is the first time that The Motley Fool Australia has NEVER put a recommendation for buying a marijuana stock.
Just click below to learn more about how to profit from the coming cannabis boom.
Click here to find out more
Motley Fool Brendon Lau contributor owns shares of BHP Billiton Limited and South32 Ltd. The Motley Fool Australia has no position in any of the securities mentioned. We Fools may not all have the same opinions, but we are all convinced that, considering a wide range of insights, we have become better investors. The Motley Fool has a disclosure policy. This article contains only general investment recommendations (with AFSL 400691). Authorized by Scott Phillips.
. (tagToTranslate) lynas corporation ltd (t) asx: lyc (t) lynas price action (t) lynas price action (t) lyc price action (t) lynas dividend (t) bhp group ltd (t) brendon lau (t) asx : bhp (t) bhp share price (t) bhp share price (t) bhp dividend (t) south32 ltd (t) asx: s32 (t) south32 price action (t) south 32 price action (t) s32 price action ( t) sud32 dividend (t) s & p / asx 200 (t) index: ^ axjo (t) indexasx: xjo (t) asx: xjo (t) trade war (t) tariff (t) us (t) china ( t) huawei (t) google (t) impact (t) miners (t) rare earths (t) asx (t) investing (t) shares (t) sharemarket (t) blue chip (t) portfolio (t) dividend ( t) 2019 shares (t) if you buy (t) low yield shares (t) at low cost (t) buy (t) hold (t) sell (t) s & p / asx 200 (t) resources (t ) share gainers