Chinese Apple suppliers’ shares climb after iPhone maker rebounds in New York trading
- Their longer-term performance will be decided by developments in the US-China trade war, says analyst
Shares of Apple’s suppliers in China climbed on Monday after the smartphone giant rebounded strongly from a recent 22-month low.
All 21 mainland China-listed companies that supply the iPhone maker, according to Bloomberg data, closed higher on Monday, as did the four that are listed in Hong Kong.
Apple isn’t having a crisis, but their market share is gradually being eroded by competitors
By Friday’s close in New York, Apple had soared by nearly 20 per cent to US$170.41, a strong comeback from US$142.19 on January 3, its lowest point since April 2017.
Apple reported a sharp growth in its services business at the end of January, according to Reuters, helping to boost its own shares and those of its suppliers. Investors are banking on services like Apple Music and the App Store to lift the company, after weakening demand for handsets caused iPhone sales to dip for the first time in the final quarter of 2018.
Monday’s gains came despite new data showing a slump in Apple’s iPhone shipments in China. Handset exports to China fell by about 20 per cent in the fourth quarter amid an overall shrinking of demand in the world’s largest smartphone market, according to a report by research firm IDC, published on Monday.
In Hong Kong on Monday, AAC Technologies Holdings rose 5.06 per cent to HK$50.85. It was the second biggest gainer in the information technology sector, which led the gains in the Hang Seng Index. Fellow supplier BYD Electronic International gained 3.76 per cent to HK$10.22, while Cowell e Holdings and Ju Teng International Holdings were also up, by 10.09 per cent to HK$1.20 and 4.04 per cent to HK$2.06, respectively.
On the mainland, Lens Technology Co led advances, surging 10.03 per cent to 6.69 yuan. Others followed suit, from Suzhou Anjie Technology rising 10 per cent, to O-film Tech Co gaining 7.90 per cent.
One of Apple’s most famous suppliers, Foxconn Industrial Internet Co, was up 2.10 per cent to 12.15 yuan.
The longer-term performance of Apple’s suppliers will be decided by developments in the US-China trade war, said Louis Tse Ming-kwong, managing director of VC Asset Management.
“The point is, after this rebound will the price come down again? I think we will have to wait and see what happens with the Sino-US trade talks. It very much depends on the outcome,” he said. “The reason is that the US doesn’t want Made in China 2025. If there is any indication that China will bow to the demands of the US, that could cause profit taking of recent gains of the suppliers.”
Apple, said Tse, still remains under pressure because of a gradual decline in the tech cycle and an increase of competition, most notably from South Korea and China, which will in turn affect suppliers’ market performance.
“Apple isn’t having a crisis, but their market share is gradually being eroded by these competitors,” he said.
