China Recycling Energy Corporation Common Stock (NASDAQ: CREG) is having a great start to the trading session this morning, gaining more than 17% in the premarket. Interestingly, the most recent news issued by the company was released on Thursday of last week. So, what is it that has investors excited today? Here’s are three reasons that the stock is soaring:
Reason #1: The Trade War Makes A Turn For The Better
First and foremost, as the company’s name would suggest, China Recycling Energy is a company that is based in China. Unfortunately, an economic downturn in the region has led to substantial declines in various Chinese equities and has likely played a role in the blues being sung by CREG and its investors over the past year.
The economic downturn is largely the result of a trade war being waged between the world’s dominating economies, the United States, and China. For some time now, the Trump Administration and Chinese Government have been going tid for tat in terms of terrifs in an effort to get the upper hand in coming trade agreements.
For the most part, little progress was made over a very long period of time as tensions continued to grow. Of course, this was bad for CREG and several other Chinese companies.
Nonetheless, it seems as though there is a glimmer of light now surrounding this dark cloud. On Friday, President Trump announced that his administration has entered into a trade deal with China.
Although the new deal will not reverse tariffs, it would stop a tariff increase from 25% to 30% on about $250 billion of Chinese goods that was planned to take place this week. Without the threat of increasing tariffs, Chinese companies and investors that buy their shares or rejoicing.
Moving forward, the United States and China will work toward what’s being called “phase two” of negotiations. This phase will include tougher issues like technology theft and predatory regulation against American companies.
Nonetheless, while the trade war is far from over, progress is finally being made. That’s exciting for CREG and other Chinese companies as the truce may stop, or slow, the bleeding in the Chinese economy.
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