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.'”
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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