Adding to Visa on China Expansion
By Jim Cramer and Jack Mohr | 03/29/16 - 11:11 AM EDT
Actions Taken:
Symbol Action # Shares Traded Recent Price Shares Owned After Trade % of Portfolio After Trade
V Buy 75 $74.35 825 2.56%
After you receive this Alert, we will buy 75 shares of Visa (V:NYSE) at around $74.35. Following the trade, V will represent roughly 2.56% of the portfolio.
Although Visa is trading slightly above our cost basis, we are looking to build the position before shares run away from us. In particular, on top of the many catalysts we have mentioned in the past ( see previous Alert here), we are encouraged by the progress that Visa has made in its expansion into China.
As background, last month Visa signed a memorandum of understanding (MoU) with UnionPay, the state-run China credit card company -- the only such company in China. The MoU was signed with the intent to collaborate in the future on payments security, financial inclusion, and technological innovations.
The move by Visa comes in advance of China’s impending decision to open its card-processing network to foreign entities, in line with the ruling by the World Trade Organization that China must open up its market to foreign companies.
On Friday, Visa pushed forward with the expansion as it signed a cooperation plan with the China National Tourism Administration (CNTA), establishing V as a strategic partner for the U.S.-China Tourism Year -- a year-long series of events aimed at enhancing tourism and trade cooperation between the two nations. Visa will be a key contributor to the effort throughout the year, helping to promote cross- border travel and collaborating to build up payment acceptance infrastructure in smaller tourist cities in China.
Any head start that Visa can earn in terms of fostering relationships in China will certainly benefit the payments network moving forward, when the world’s most populous country becomes more widely open to foreign companies. The opportunities in China are endless, not only with its large population, but also for the innovations the country has already made in the payments space, especially in terms of its digital ecosystem (i.e. the presence of mobile wallets and in-app payments).
Visa can benefit from all that UnionPay has learned over the course of its business lifecycle. We are excited for the opportunities that lie ahead.
Regards,
Jim Cramer, Portfolio Manager & Jack Mohr, Director of Research - Action Alerts PLUS
DISCLOSURE: At the time of publication, Action Alerts PLUS was long V.
jmho, John
