Daily Management Review

The C.E.O of Apple ‘Reassures’ The Agitated Investors As Chinese Stock Market Slumps


08/31/2015


Tim Cook reassures the Apple investors as the Chinese stock market comes melting down, hinting at the rebound on Monday.



The C.E.O of Apple, Tim Cook shared his comments through CNBC, wherein he ‘reassured’ the shareholders about iPhone manufacturing market sector of China, which soon saw a “dramatic” drop of “13 percent” followed by a “rebound” that brought it back to “positive territory”. As Reuters states, it seems quite “an unusual step”.
 
The reign of the growing demand for iPhones primarily rests on the Chinese consumers as they play a crucial role. However, the slump in the Chinese stock market along with the “recent devaluation” of Baijing’s yuan, have cast a cloud of worry upon the investors of Apple, as they fear a “slowing growth in the world's No. 2 economy”.
 
While the stock market of China plunged “close to 9 percent” on Monday morning, the C.E.O of Apple reminded the investors of the company’s business health “midway through a financial quarter”. Cook had given an e-mail reply, before the Wall Street opened on Monday, wherein he commented on question that were raised regarding “iPhone activations in China” which gained popularity over “past few weeks”. His response clearly mentioned that the last two weeks saw the best performance of Chinese App Store.

Cook went on:
"Obviously I can't predict the future, but our performance so far this quarter is reassuring. Additionally, I continue to believe China represents an unprecedented opportunity over the long term”.
 
The week began with slump of “13 percent” in Apple’s shares, whereby hitting at “$92 amid a selloff in the broader U.S. market”. However, within a matter of “two hours”, the tables turned to Apple’s favour and the company traded up to “2.25 percent at $108.12”, whereby contributing almost “$85 billion to Apple's market capitalization”. Nevertheless, Daniel Ives, an FBR analyst says:

“The fact that (Cook) publicly gave some positive signs around what Apple is seeing out of China during this market meltdown is a huge sigh of relief for investors who have started to have nightmares about what China can become over the coming years for Apple”.
 
The past success of Apple, which it acquired in the last decade, holds the company in the top “for many portfolios”. Moreover, the company also contributes to the S&P 500 by adding “305 percent”. Likewise, Apple indirectly affects “millions of investors” who save “for their retirements through passively invested index funds”. Amid the “potentially stumbling economy” of China Apple’s face remains at risk which cautions many on Wall Street. The rebound of Monday brought Apple’s stock down to “19 percent” from its high stand that the company had in the end of February. The analyst of Cowen and Company,

Timothy Arcuri stated:
"I am concerned about a slowdown in Apple's demand from China and I think they haven't even seen the extent of it yet”.
 
Moreover, Reutors report that:
“Such fears were exacerbated last week after a Gartner report said smartphone sales in the country fell for the first time ever in the previous quarter”.
 
In fact, many believe that the smart-phone market of China has reached a saturation point as the number of “first-time buyers” dwindle, yet one cannot overlook the fact that Apple continues to gain Chinese market share.
 
 
Source(s):http://www.reuters.com/article/2015/08/24/us-appleinc-china-idUSKCN0QT1HH20150824
 







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