Reason #2: The Timing Couldn’t Be Better
Another factor that’s likely helping the stock gain in multiples has to do with the timing fo the deal. Chinese companies have largely been in the dumps for some time as a result of the trade war between the United States and China.
However, on Friady, the Trump Administration announced that it has entered into a “Trade Truce” with China. Under the terms of the truce, the Trump Administration agreed not to move forward with a tariff increase from 25% to 30% as early as this week.
In exchange, China agreed to increasing aggricultural purchaseas and their efforts to protect United States technologies from IP thieves.
While the trade war is far from over, it puts a glimmer of hope around a dark cloud that was hanging over the Chinese economy, and that glimmer of hope was first seen on Friday.
As a result, many Chinese stocks are up in the market today as investors see opportunity. With the acquisition news hitting the tape on the same day that investors are reacting to economic sunshine in China, it only makes sense that the gains are exaggerated.
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