What did Donald Trump whisper into the Chinese president’s ear? This question has been puzzling the world since the meeting between the U.S. president and Xi Jinping. At the end of October, the two leaders met in South Korea - images of their handshake show Trump leaning in to speak to his counterpart. Even lip readers have tried to decipher the scene, but the message remains a mystery. What is certain, however, is that this first face-to-face encounter between the two heads of state since 2019 has led to a relaxation of tensions in the U.S. - China trade dispute. Among other things, Xi agreed to suspend the tightened export controls on rare earths for one year. As recently as early October, Beijing had made those regulations stricter, fueling fears of new supply shortages. Rare earths are indispensable for a wide range of products, including smartphones, televisions, and electric motors.
Unsurprisingly, this political back-and-forth has not left the shares of companies in the sector unaffected - particularly MP Materials. Over the past month, the U.S. mining company’s stock has shown a volatility of about 85%. When tensions between the U.S. and China escalated in early October, the small cap’s price initially surged by nearly half, reaching around USD 100. After the Trump–Xi meeting, however, the stock fell back and is currently trading at below USD 60. These short-term swings are unlikely to change MP Materials’ strategic importance for the U.S. government. Washington is seeking greater independence from China in the supply of rare earths. The company’s Mountain Pass mine in California holds an estimated 1.9 million tons of rare earth oxides - one of the richest deposits in the world and the largest of its kind in the Western Hemisphere.
With a spectacular deal in July, the U.S. government secured access to this “treasure.” Through a public-private partnership, the Department of Defense invested in the mining company. At the same time, MP Materials received a purchase and price guarantee. Unsurprisingly, following the announcement of this multibillion-dollar agreement, the stock of the rare earth specialist surged sharply. Operationally, MP Materials’ progress has been less dramatic but steadily upward. In the first half of 2025, the company extracted around 25'000 tons of rare earth oxides - a 25% increase compared to the previous year’s period. This put the California-based miner on track to surpass the record production level achieved in 2024. However, the company remains deeply in the red: for the first six months of 2025, it reported a net loss of about USD 53.5 million. Analysts, however, expect MP Materials to break even in 2026.
On Thursday, November 6, the consensus will be put to the test when MP Materials releases its Q3 2025 interim report. Right on cue, Leonteq is launching new Softcallable barrier reverse convertibles on this highly volatile stock. In CHF, investors can expect quarterly coupon payments of 11.80% p.a.; the USD-denominated version offers an even higher yield of 15.80% p.a.. These attractive returns come with downside protection through a barrier set at 49% of the initial level. As long as MP Materials does not touch or fall below this barrier, investors receive full repayment of the nominal amount at maturity. However, if the underlying breaches the threshold, the investment becomes fully exposed to market risk. Investors should also note the Softcallable feature, which allows the issuer to terminate and redeem the product early.
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