Editor's note: The trade war between the U.S. and China is back in the headlines...

And as regular readers know, the rising tensions have spooked investors in both countries. U.S. stocks are down about 5% over the past month, while Chinese stocks have fallen roughly 10% since mid-April.

But our friend and colleague Steve Sjuggerud believes this will prove to be nothing more than a short-term setback. He still expects U.S. stocks to experience a final "Melt Up" before the current bull market ends... And he continues to be as bullish as ever on China.

In fact, Steve believes two major changes will soon happen in China. As he writes in today's Masters Series essay – adapted from the December issue of True Wealth Opportunities: China – the first one is set to occur before the end of this year...

The 'New Nasdaq' Is Almost Here

By Steve Sjuggerud, editor, True Wealth Opportunities: China

Two tectonic shifts are coming for the Chinese stock market...

The first is nearly guaranteed to take place later this year. The other seems like a certainty as well... The only questions are exactly how and when it will happen.

These changes will right two major wrongs in the Chinese market. And I believe both could be huge catalysts for a boom in Chinese stocks this year and beyond.

This theme of "wrongs that need to be righted" has been a major driver for our Chinese investments in recent years. That's for a simple reason...

When an imbalance exists, we know it will eventually be corrected. And as investors, we know we can often make huge gains as the situation shifts.

That's the case right now with China's next big change. It's righting a wrong in China's market. And because we have the foresight to understand what's going on and get ahead of it... we stand to make incredible profits.

You see, China is launching its own Nasdaq-like stock exchange. (I've called it the "New Nasdaq.") The plans were announced toward the end of 2018.

This is HUGE news. It will allow hundreds, potentially even thousands, of China's fast-growing tech companies to go public for the first time... something that hasn't been possible before.

That's right. Imagine this... If Facebook (FB) were a Chinese company that had tried to go public in China in the beginning, it would have been banned. Amazon (AMZN), too.

In fact, just about every U.S. tech company that got its start in the '90s would have never been given a chance.

Today, 80% of all U.S. initial public offerings ("IPOs") would be banned under China's current system. It's an incredible wrong in China's stock market... But it's about to get righted with the addition of this new exchange.

It's a simple issue – one the U.S. solved decades ago... You see, right now, unprofitable companies are banned from China's stock market. They can't go public.

It sounds strange to folks in the U.S., but it wasn't always possible here, either...

For decades and decades, companies couldn't list in the U.S. without showing years of profits. That system seemed logical. It seemed like a way to protect investors.

No one wanted to mess with businesses that weren't viable and making money. So the exchanges didn't let them list. Companies would go public after proving themselves with years of profits.

This was the model for decades. But it changed in the mid-1990s, with the public offering of a single business – Netscape.

Netscape was one of the first Internet browsers. More than that, it became the face of the Internet – and the face of the Internet boom.

Investors wanted in on the company. They didn't care that it had only been in business for 16 months... and had no profits at all.

Shares were offered to the public on August 9, 1995. The stock was an immediate hit. In fact, the offer price doubled from $14 to $28 just before trading began.

The stock reached a peak near $75 on the first day of trading. It closed its first day at $58.25... up more than 300% from the initial offer price.

Those gains caught the attention of even more investors. The brand-spanking-new company received a valuation of $2.9 billion. Not bad for a business that had never turned a profit.

All this was possible because Netscape listed on the then "second-rate" Nasdaq stock exchange. The Nasdaq had lower listing requirements than the New York Stock Exchange. That allowed Netscape to go public despite a lack of profits.

Netscape's success on the Nasdaq helped pave the way for an absolute frenzy. It created the perfect environment for young tech businesses in the '90s...

These companies wanted to grow. But they needed cash to get going. They didn't have a chance of making profits otherwise. Normally, they would've been kept out of the public markets – but the Nasdaq let them in. And with Netscape, everyone got a taste of the kind of money you could make on a blockbuster IPO.

The excitement kicked off one of the most dramatic bubbles in history. The Nasdaq Composite Index soared hundreds of percent in just a few short years.

Of course, plenty of carnage followed the bubble. But the frenzy completely changed how going public worked in America.

Today, roughly 80% of American IPOs would be banned under China's guidelines because they are unprofitable. Some of these companies will fail. But for the companies with growth-worthy ideas... public markets are rocket fuel.

We take this for granted in the U.S. But in China, it's not possible... Not yet, at least. Right now, only profitable companies can list on the Shanghai Stock Exchange.

That's about to change, starting later this year...

The big plan is for China to launch its own New Nasdaq this year in Shanghai. Insiders are placing the launch as early as this month, and reviews of IPO applicants are underway now.

According to my sources, this new exchange could receive as many as 1,000 applications from companies ready to go public with looser restrictions.

That's 1,000 up-and-coming Chinese tech companies that need money... money they'll likely get beginning this year... money that will fuel the next wave of Chinese technological innovation.

This is big news. And it's not a speculation at all. The train is in motion. It's not a matter of if – just when. And right now, it looks like the New Nasdaq is coming soon.

Good investing,

Steve Sjuggerud

Editor's note: The New Nasdaq is just around the corner. You must act quickly... or you'll risk missing out on triple-digit gains as this massive shift plays out. Steve just prepared a special presentation to highlight what you must do to position your portfolio before the new exchange opens. Watch it right here.