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

Yujing Liu
1 / 3
Apple-related stocks hammered in China, Hong Kong markets after US smartphone giant cuts revenue outlook

Hong Kong and Chinese stocks struggled for direction on Thursday, ending the session with marginal losses, as Apple suppliers were hammered after the smartphone giant slashed its revenue outlook based on weaker-than-expected iPhone sales in China.

The Hang Seng Index closed down 0.35 per cent, or 87.74 points, at 25,042.61. At one point during the session the benchmark index plunged below the 25,000 level before recovering, a level that has not been breached since October.

The gains come a day after Hong Kong’s benchmark index 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 see-saw.”


Apple-related stocks pounded in China, Hong Kong after revenue outlook is cut

Stocks on the mainland were little changed. The Shanghai Composite ended down 0.04 per cent, or 0.93 point, to 2,464.36, while the CSI 300 of large caps dropped 0.16 per cent, or 4.70 points, to 2,964.84.

Elsewhere in Asia, Tokyo’s Nikkei 225 dropped 0.31 per cent to 20,014.77, Seoul’s Kospi was down 0.81 per cent to 1,993.70 and Taipei’s Taiex lost 0.65 per cent to 9,492.42.

Bad first day at the office for China economy

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. Since the start of 2019, the Hang Seng Index has declined 3 per cent, while the Shanghai Composite Index has lost 1.34 per cent

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.

On Wednesday evening the People’s Bank of China said it had relaxed conditions in its assessment for targeted reserve requirement cuts, a move designed to bolster support for small companies. Assessments will now include loans for firms with credit lines of less than 10 million yuan (US$1.46 million), up from the previous 5 million yuan.

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.

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

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

Hong Kong stocks down a wretched 14 per cent in 2018

Camera modules and lenses producer Sunny Optical plunged 6.76 per cent to HK$61.40 in Hong Kong, the lowest since June 2017. AAC Technologies, an audio components supplier to Apple, dropped 5.41 per cent to HK$41.05, 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 4.88 per cent. Foxconn Industrial Internet, a subsidiary of Apple’s top manufacturer Foxconn, inched down 0.69 per cent.

What stock traders can expect after ‘heaven to hell’ year

Geely Automobile Holdings, a Chinese carmaker and owner of Volvo Cars, shed 8.17 per cent after Morgan Stanley downgraded the stock. In a New Year’s Day speech on Wednesday, Li Shufu, chairman 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 slipped 4.31 per cent to HK$2.22, 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.

Kaisa says its US$150 million Xi’an development project is at risk

In the initial public offering market, Weigang Environmental Technology, a waste incineration disposal company, traded just up from its offering price of 89 HK cents on debut, ending at 90 HK cents.

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.

This article Apple-related stocks hammered in China, Hong Kong markets after US smartphone giant cuts revenue outlook first appeared on South China Morning Post

For the latest news from the South China Morning Post download our mobile app. Copyright 2019.

More from South China Morning Post: