Apple-related stocks hammered in China, HK markets after US smartphone giant cuts revenue outlook

04-Jan-2019 Intellasia | South China Morning Post | 6:00 AM Print This Post

Hong Kong and Chinese stocks struggled for direction in early Thursday trading, with Apple suppliers hammered after the smartphone giant slashed revenue outlook based on weaker-than-expected iPhone sales in China.

The Hang Seng Index bobbed between gains and losses before closing for the noon break down 0.3 per cent, or 72.59 points, at 25,057.76. The benchmark index once plunged below the 25,000 level, which had not been breached since October of 2018.

Pressures on smartphone component suppliers around the world weighed on Hong Kong’s benchmark index, after it plummeted 2.8 per cent on Wednesday in the worst first trading day of a new year in over two decades.

“The plunge at the start of the year was worse than I thought, even though I expected a decline,” said Kenny Tang Sing-hing of China Hong Kong Capital Asset Management. “The first quarter will be full of uncertainties and the market is likely to seesaw.”

The Shanghai Composite Index was little changed Thursday at 2,465.36.

Mounting worries triggered by fresh evidence of China’s slowing economy which is showing its effect even on US technology giant Apple have been a drag on the markets.

China’s manufacturing activities measured by the official purchasing managers’ index contracted in December, the first time since July 2016, according to data released on Monday. A similar private gauge reading on Wednesday also pointed to shrinkage.

Looking ahead, the outcome of a US trade delegation’s reported visit to Beijing on January 7 could provide more clarity on the direction of the trade war between the world’s two largest economies, which pushed China and Hong Kong markets off the cliff in 2018.

Apple lowered its first quarter revenue guidance in a letter to investors on Wednesday, blaming an economic slowdown in China for weakening sales.

“[W]e did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Apple’s chief executive Tim Cook wrote in the letter. “[M]ost of our revenue shortfall to our guidance…occurred in Greater China across iPhone, Mac and iPad.”

Camera modules and lenses producer Sunny Optical plunged 4.9 per cent to HK$62.6 in Hong Kong, the lowest since June 2017. AAC Technologies, an audio components supplier to Apple, dropped 5 per cent to the lowest level since August 2015. The two stocks plummeted 30 per cent and 67 per cent over the course of 2018, respectively.

In mainland China, Luxshare Precision Industry, a computer cable and cable connector maker, shed 3.7 per cent. Foxconn Industrial Internet, a subsidiary of Apple’s top manufacturer Foxconn, inched down 0.3 per cent.

Geely Automobile Holdings, a Chinese carmaker and owner of Volvo Cars, declined 8 per cent after Morgan Stanley downgraded the stock. In a New Year’s Day speech on Wednesday, Li Shufu, chair of the company’s parent Zhejiang Geely Holding Group, said the group will face greater challenges amid more opportunities.

Meanwhile, shares of Shenzhen-based home developer Kaisa Group Holdings stabilised and dipped 0.9 per cent to HK$2.3, after crashing by 7 per cent on Wednesday. The company faces losing its 1 billion yuan (US$146 million) investment in an urban redevelopment project in the central city of Xian due to a conflict with a local developer.

In the initial public offering market, Weigang Environmental Technology, a waste incineration disposal company, traded flat on debut at the offering price of HK$0.89.

Shares of Jiangsu Zijin Rural Commercial Bank, which was listed in Shanghai on Thursday, surged by 44 per cent to trade at 4.52 yuan.

https://sg.news.yahoo.com/apple-related-stocks-hammered-china-025331488.html

 


Category: Hong Kong

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