‘Trump wins big’ meme stock surges in China ahead of US election

Chinese investors are jumping into a little-known stock whose name sounds like “Trump wins big” less than a week before the US presidential election.

Shares of Wisesoft Co., whose Chinese name “Chuan Da Zhi Sheng” sounds like “Trump wins big” to Mandarin speakers, surged by the daily limit for a third day, bringing gains this week to more than 30 per cent despite weakness in the broader market. The stock rallied after Trump won the election in 2016.

“Wisesoft’s name includes both Trump and him winning and that carries a special meaning for Chinese investors,” said Shen Meng, a director at Chanson & Co. This comes amid election-related reports that bode well for Trump, he added.

Credit: Bloomberg

Retail investors in China are known for trading in stocks based on homophones — words that sound similar to another name or a phrase. In 2023, retail traders chased shares with dragon-related names heading into the Year of the Dragon in the Chinese zodiac.

The rally in Wisesoft comes as Trump emerges ahead in prediction markets, while polls show a neck-and-neck race against Democratic candidate Vice President Kamala Harris. Interest in the stock has pushed it to overbought territory, based on its 14-day relative strength index.

The climb may not be sustainable given little change in fundamental support for the software and equipment maker. The company has been reporting losses in recent years and posted a wider net loss of 27 million yuan ($3.8 million) for the first nine months of the year compared to the same period in 2023.

“Historically, meme stocks don’t last long in China,” said Billy Leung, an investment strategist at Global X ETFs. Investors “tend to overplay it.”