There was no respite for Asian investors Friday as most regional markets suffered more losses, with Tokyo tanking three percent and technology firms taking another hiding after Apple’s shock revenue warning.
The new year has proved so far to be anything but happy on trading floors as dealers face a confluence of issues including the China-US trade war, China’s stuttering economy, the US government shutdown and Brexit.
Apple has been the source of angst this week after it slashed its revenue forecasts blaming weak Chinese demand for its iPhones and citing the tariffs spat between Washington and Beijing.
The US tech titan plunged 10 percent Wednesday — wiping $75 billion off its value — in response to the announcement and analysts said the fact such a usually safe firm was feeling the pinch was a sign of deeper problems in the global economy.
Technology firms, particularly those linked to Apple, were among the worst hit in Asia Friday. In Tokyo, which was returning from a four-day break, supplier Kyocera fell 3.3 percent, Japan Display was 1.4 percent off and Sharp dived 4.2 percent, while Alps Alpine shed 5.8 percent.
Sony was also more than four percent lower. There were also hefty losses for AAC technologies in Hong Kong and Foxconn in Taipei, which had already been badly hit Thursday.
“Belief in global corporate earnings is fading against the backdrop of the US-China trade friction,” Nobuhiko Kuramochi, head of investment information at Mizuho Securities in Tokyo, told Bloomberg News.
“Deteriorating Apple earnings will lead to volume cuts for suppliers… while it could also mean cost-cutting pressures.”
Tokyo’s Nikkei 225 index ended the morning down 3.0 percent.
ANALYSIS: For most of the past two decades, China – with 400 million middle-class consumers growing richer by the day – was a one-way bet for the world’s corporations and a driver of the global economy.
By early 2018, General Motors was selling a third more cars in China than in the US. Starbucks unveiled plans to open a new coffee shop in China every 15 hours on average. Adidas saw 26 per cent growth in China while Western Europe, its home market, was staying flat or shrinking.
But what happens when the Chinese growth juggernaut slows? Or worse yet, grinds to a halt?
The world got a glimpse on Wednesday when Apple, the second-largest public tech company, lowered quarterly sales estimates for the first time in more than 15 years. Chief executive Tim Cook blamed the unforeseen “magnitude of the economic deterioration” in China, the world’s largest smartphone market. Apple shares plummeted nearly 8 per cent in after-hours trading and pulled down a bevy of consumer stocks with exposure to the Chinese market.