“In the wake of China’s stock market drops, some investors are starting to worry that the the country’s economy won’t be able to handle demand for new consumer products and thus bring about some major problems for companies largely exposed to the country — namely Apple,” Chris Neiger writes for The Motley Fool. “China is Apple’s second-largest revenue market after the U.S. and its largest smartphone market.”
“Of course, China’s stock market problems aren’t desirable for anyone, but they likely don’t spell doom for China, or Apple,” Neiger writes. “In fact, there’s plenty for Apple to look forward to there.”
Neiger writes, “Apple’s really doing in China and why it’s a great time for the company to be there.”
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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