China fears propel Apple shares to five-day losing streak

Apple Inc’s stock hit “its first five-session losing streak since January on Thursday as investors worried about the economic health of China, a key market for iPhones,” Noel Randewich reports for Reuters. “Apple shares [closed at $120.07 (-2.50, -2.04%)] in afternoon trade and have lost about 4 percent since July 1.”

“With around 30 percent knocked off the value of Chinese shares since mid June, some investors fear that the turmoil could hurt consumer demand and the Chinese economy as a whole,” Randewich reports. “Individuals account for a major chunk of stock investing in China and the market selloff may curb their disposable incomes.”

Randewich reports, “‘China is poised to be Apple’s high-octane fuel for the next few years, especially for iPhones,’ said FBR analyst Daniel Ives. ‘Given a lot of the dark clouds we are seeing in China, that has spooked investors.'”

Read more in the full article here.

MacDailyNews Take:

A slowing Chinese economy is a risk for Apple. However, UBS economist Tao Wang sees limited impact of the stock market turmoil on the economy. Equities account for about 20% of household financial wealth or 12-13% if property is included. Household wealth jumped by 6% in the last nine months. The loss of this quick gain may not be as important for consumption as it could have been if the gains had been achieved over a longer period of time, since there is little evidence of earlier stock market gains substantially affecting household consumption. Moreover, the correlation between consumption and stock prices is ambiguous. We think Apple is okay for now, but we will watch the situation closely.UBS analyst Steve Milunovich, July 9, 2015

20 Comments

  1. If China is a considerable portion of Apple revenue, and it is, then a slowing Chinese economy will affect the stock. It’s simple math. China has helped Apple greatly so far. It’s what Tim Cook comments on constantly. You can’t have it only one way. What can go up can go down also. Wishing and hoping doesn’t count.

    1. The stock market is not the economy. Just as in the US, stock prices in China have little to do with performance of the company. Many other factors drive share prices. This is just demonstrating that in a tightly controlled economy, when things get out of balance, they get out of balance in a big way. But if you think China is going to collapse economically, I’ve got a nice bridge I’d like to sell you.

      1. mmmmmmm no, I didn’t say the Chinese economy was collapsing. Quit acting like a fanboy. Get your head out of the sand and quit making excuses for a comany that you don’t own or work for. And you have no idea about the stock market fundamentals or how it operates. Or what affects it. Please stop, you are embarrassing yourself.

          1. OK, one more time. If a robust Chinese economy has helped iPhone sales then a sagging Chinese economy can hurt iPhone sales. When people have money they can spend it. When people don’t have money they can’t spend it. Even you and your expert should understand that. Your expert and the article do not address that. Quit mixing Apples and oranges. And we can all pull an article out of our ass to try to support something that we believe.

    1. I wonder if the currency values will matter for sales of iPhones in China. Possible that if the currency gets weaker vs the dollar prices will be raised to maintain profits putting it out of reach of some prospective buyers. Comes with having such a large portion of your company invested in a single product line.

  2. Forget about China. What is worrying serious investors is not China but lack of attention to detail under Tim Cook. Steve would have never allowed Watch to come to the market, It is a mess. When techies say it is complex then it is not something for ordinary Does. No wonder sales plummeted. The second (even bigger) failure is Apple Music. It is complex as well as messy. If you can’t beat the likes of Pandora and Spotify in UI then you are done as an innovator. Maps was one failure, followed by Watch and now Apple Music. This never happened before. Tim Cook is killing Apple through his neglect or incompetence and that is what is worrying investors.

    1. On iOS Apple Music is inconsistent and frustrating to use at times, but the “For You” and all the curated playlists make-up for the beta feel. I have found a lot of cool stuff over these last few days and because of that have created a couple of fun playlists.

      I have been with iTunes since the beginning and averaged about one playlist every two weeks for a number of years. Over the last few years I have only averaged three playlists a year because the newer stuff wasn’t appealing to me. In the past, the time to make a decent playlist took from eight to twenty hours, which involved listening to bits and pieces of many (sometimes hundreds) songs. Using Apple Music’s “Similar Music”, “For You” and other curated lists I made one playlist over the weekend which took about two hours and one playlist on Tuesday which took about three hours. This is music I have never experienced before or haven’t heard in a very, very long time.

      The quirks in the software will get fixed over time; it’s all about the music now, and I am very excited for the future.

  3. Is the Chinese economy sagging? If it is, this is the first I have heard about it. There was an analyst on Bloomberg yesterday who recently purchased an iPhone in Hong Kong. He said the line to purchase the device was two hours long and many waiting were from mainland China. I have been following Apple very extensively for the last few years and i don’t recall hearing demand for any Apple product being this strong so far into its product cycle. So, even if the Chinese market is lagging it is not impacting Apple.

  4. Cant win it seems, it wasn’t long ago that there were fears that Apple’s presence in the Chinese market was deemed far too weak and the shares suffered, now little more than a year later its because they are too strong. A nicer problem to have I would suggest in the bigger picture.

  5. The usual illogic of WallNut Street.

    What does China failing mean for Apple? It means continued low wages for workers at Apple’ contracted manufacturers.

    Note, this is not to infer my change of heart regarding Apple’s involvement with Chinese manufacturing. Handing dough over to China for ANY reason is a seriously BAD IDEA. Back-stabbing China, criminal nation.

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