“The Brexit news helped send the price of Apple’s shares downward… However, Apple’s shares buffeted the news better than most,” Daniel Eran Dilger reports for AppleInsider. “The British pound plummeted against the U.S. dollar, collapsing from $1.50 to close at $1.37, a massive move for a major currency and resulting in the pound’s lowest point in more than 30 years. The Euro also fell, but by a much smaller amount (close to 3 percent against the dollar). Currency exchange rates play a major role affecting the price of Apple’s exports, so the weakening of any foreign currency against the dollar is generally a problem for Apple.”
“Going forward, the UK’s departure from Europe will continue to roil the markets simply due to the uncertainty involved. No country has ever left the EU before, and the leave vote was promoted emotionally through a campaign centered on rejecting the advice of ‘elite experts,'” Dilger reports. “Companies doing business in the UK will have to face an unknown set of new trade agreements and other regulation changes. The change is expected to hurt UK startups, both because it impacts their ability to hire EU citizens and introduces a lot of new complexity related to their ability to sell their products to Europe. But it’s also a benefit in the sense that local firms can sell their products at a favorable exchange rate. ”
“Apple also has 39 Retail Stores in the UK, and the region generates significant sales of iPhones and other Apple gear. A dramatically lower pound means that UK citizens will face lower buying power, likely resulting in higher prices and therefore blunted demand for Apple’s products and services,” Dilger reports. “At the same time, the lower Pound also means that Apple can hire employees and build out new offices and retail stores in the UK at a discount. Apple could also take advantage of panicked markets and newly conservative investors to offer new bonds in the UK, increasing its debt leverage to effectively use foreign earnings to fund American investments, dividend payments and stock buybacks.”
Tons more in the full article here.
MacDailyNews Take: The untangling of this ball of knots will be extremely interesting to watch and hopefully illuminate some elemental truths regarding economics, human nature, sovereignty, trade, geopolitics, national cohesion, etc., etc., etc…
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Historic Brexit vote roils markets worldwide; Apple shares drop – June 24, 2016