The start of the COVID-19 pandemic seems like a long time ago now.
If you cast your mind back to 2020, most of the developed world was in lockdown. The Australian government then not unreasonably called for an independent enquiry into the origins of the coronavirus.
But China took exception to this suggestion and started a wave of economic punishments designed to pressure and make an example out of Australia.
Massive losers from frosty Canberra-Beijing relations
Heavy tariffs on Australian wines and a complete slowdown in daigou sales channels downgraded the companies’ earnings almost instantly.
Treasury shares are still 9% down from August 2020, and the A2 Milk stock price has plunged 76% since July 2020.
But a potential turning point in Australia-China relations came two weeks ago when Labor won the federal election.
Many analysts predicted that an ALP government would thaw Canberra’s frosty relationship with Beijing.
After all, it couldn’t get any worse.
Could a Labor government revive A2 Milk and Treasury Wine?
So one curious investor wondered whether it is now time to wade back into A2 Milk and Treasury Wine, ahead of better diplomatic relations with China.
Shaw and Partners portfolio manager James Gerrish gave his thoughts on this in his regular Market Matters Q&A.
He said his team agrees with that line of thinking.
“Your thoughts are definitely one of the reasons Market Matters is long Treasury Wines,” he said.
“But like A2 Milk, it has delivered a few false dawns over recent times.”
Gerrish suspected new Prime Minister Anthony Albanese can only improve Australia’s rapport with China.
“But the companies also need to start delivering results — hence the answer is a cautious yes.”
The broader analyst community seems to agree with Gerrish’s team that currently Treasury looks the better bet.
According to CMC Markets, six of 11 professionals rate Treasury Wine shares as a buy. Meanwhile, only three out of 14 analysts say the same about A2 Milk.
The post Is it time to buy A2 Milk and Treasury Wines for better China relations? appeared first on The Motley Fool Australia.
Wondering where you should invest $1,000 right now?
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.
*Returns as of January 12th 2022
- These were the best performing ASX 200 shares last week
- The Treasury Wine share price has leapt 6% in 3 weeks. Why this top broker is tipping more gains
- Top broker names 2 of the best ASX shares to buy in June
- What to do with these 3 pummelled ASX shares: advisor
- Can A2 Milk shares cash in on a US deal like Bubs?
from The Motley Fool Australia https://ift.tt/yMpGgo4