After China Warning About Trump, Apple Stocks Extend Losses

If President-elect Donald Trump follows through on campaign threats to impose new tariffs on China, there is a warning that iPhone sales could suffer and consequently Apple’s stock extended recent losses.

As investors shift funds into financial and public works companies seen benefiting from deregulation and infrastructure spending under President-elect Trump, Apple is among several major technology stocks, including, Facebook and Alphabet, selling off since Tuesday’s election.

Bringing its loss since Tuesday’s election to almost 5 percent, compared to the S&P 500’s 1.16 percent advance, the Cupertino, California company’s stock fell 2.5 percent in a continuation of that trend.

Warnings of “tit-for-tat” retaliation should Trump follow through on a campaign pledge to impose 45-percent tariffs on all imports from China were conveyed in an op-ed published in the China government-backed Global Times on Sunday which added to concern for Apple investors.

“A batch of Boeing orders will be replaced by Airbus. US auto and iPhone sales in China will suffer a setback, and US soybean and maize imports will be halted,” the op-ed said.

The slower iPhone sales in the United States and other mature markets would be made up by the China sales but the market has already become a disappointment for Apple, failing to deliver rapid growth against the hopes of the company.

Noting a worse performance than the Americas’ 7 percent decline, revenue from China slumped 30 percent in Apple’s September quarter.

Rosenblatt Securities analyst Jun Zhang said by email that potential trade conflicts as well as the country’s weakening currency could hurt Apple’s China sales. Even after fixing supply issues affecting the iPhone 7 Plus, he said he believes China iPhone sales fell in October.

Warnings of not to read too much into Trump’s campaign trail threats against China, at least in the near term were issued by Synovus Trust Company Senior Portfolio Manager Daniel Morgan, who owns $33 million worth of Apple shares.

“You just don’t just jump in and start rewriting trade agreements,” Morgan said.

On the other hand, Bloomberg reported that as Apple looks for new areas of growth, the U.S. tech giant is considering expanding into wearable eye gadgets with a pair of glasses that could use augmented reality (AR).

The device would show information and images about objects in the wearer’s field of vision and would connect wirelessly to an iPhone. Bloomberg said, citing people familiar with the matter that augmented reality – technology that overlays digital images over the real world could be used by the device but added that the project is still in the exploratory phase.

While Apple hasn’t bought enough quantity of components to suggest the glasses will be going into mass-production soon the company has spoken to potential suppliers about the product and ordered small quantities of near-eye displays from one supplier.

It would be introduced in 2018 at the earliest if the Cupertino, CA-based tech green lights the product, Bloomberg’s report said.

Apple is searching for new growth drivers and it recently reported its first annual revenue decline in 15 years and the new plans come amidst such an environment.

(Adapted from Reuters & CNBC)


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