|Bid||0.00 x 1100|
|Ask||0.00 x 1300|
|Day's Range||39.31 - 39.81|
|52 Week Range||38.49 - 54.00|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||1.39|
|Expense Ratio (net)||0.74%|
Japan, long called the Land of the Rising Sun, made me wonder what we, as investors, should be calling China (FXI). China’s major indices are still down 25-30% this year alone. We know all the main excuses: tariffs from the US and excessive lending/credit bubble in China are leading to slower growth. Take a look a the relative performance this year between the S&P 500 (SPY) and the FXI, a popular large cap Chinese ETF.
The Chinese stock market is getting wiped out. That tsunami of selling has inflicted heavy technical damage on the Shanghai Composite, says one technician.
Apple (AAPL) has disclosed that some of its accounts were hacked in China (MCHI) (FXI) with the intention to steal money. In a statement on October 16, Apple apologized to Chinese users for these phishing scams, though the breach affected only some of the users. According to the company, the hackers duped some Apple users and then accessed their mobile-payment services such as Alibaba’s (BABA) Alipay and WeChat, through their Apple ID credentials and stole their cash.
Texas Instruments (TXN) supplies power management chips, analog IC (integrated circuits), and microcontrollers, which are used in almost all electronic devices, spanning industrial, automotive, communication equipment, personal electronics, and enterprise system markets. Texas Instruments is the world’s largest analog IC company, earning 67% of its revenue from the analog market and 24% from embedded processing. The personal electronics market is seasonal. The second and third quarters have been strong for Texas Instruments, with the company typically reporting double-digit sequential growth in the third quarter.
In the previous part of this series, we saw that Intel (INTC) stock has been on a downtrend. US tariffs on Chinese (FXI) imports, CPU (central processing unit) supply constraints, delays in 10 nm (nanometer) products, competition from Advanced Micro Devices (AMD), and the departure of its CEO could significantly impact Intel’s earnings. Despite these headwinds, Intel raised its 2018 revenue guidance from $67.5 billion to $69.5 billion in its second-quarter earnings call. Its upcoming third-quarter earnings on October 25 could shed some light on the financial impact of these headwinds.
In the BAML (Bank of America Merrill Lynch) October 2018 survey, while trade war concerns were still cited as the top concern among global fund managers, as they have been for six of the past eight months, the intensity of the concern dropped. About 35% of fund managers surveyed cited it as their top tail risk, which is lower than 43% and 57% of fund managers citing it a top risk in September and August, respectively. While the trade risk is still fresh and the recent trade escalations between the United States and China (FXI) have kept fund managers concerned about ongoing trade tensions, other risks have become more prominent.
Futures Down Again, China Hits 4-year lows, Yuan Throttled, Treasuries Back Above 3.2% US stock futures were down a bit but mostly subdued, while movement in Asia was a little wilder. China’ Shanghai Composite Index reached new 4 year lows today, down another 3% on the day as the Yuan (NYSEARCA:CYB) got perilously close to […] The post Market Morning: China, Yuan Crushed; Fed Minutes Sparse, HIV Meets Match, Exxon Wants China appeared first on Market Exclusive.
Unit shipments fell 13.5% in the second quarter of calendar year 2018, 11.7% in the first quarter of 2018, 7.9% in the fourth quarter of 2017, and 5.5% in the third quarter of 2017. Tablet sales have in fact declined for the last 15 consecutive quarters, according to research firm IDC. Despite this decline, Apple (AAPL) has managed to easily outperform markets and generate robust iPad sales.
According to the latest BAML (Bank of America Merrill Lynch) survey, investors’ outlook for economic growth has worsened further. In August, a net 7% of the managers surveyed expected global growth to slow down next year. In September, a net 24% of the managers surveyed expected global growth to slow down in the next 12 months.
According to market research company Gartner, Apple’s share in the global personal computer (or PC) market is estimated to decline in the third quarter of calendar year 2018 (or Apple’s fourth quarter of fiscal 2018). Global PC shipments have been estimated to be flat at 67.20 million units in the third quarter. Gartner estimated Apple’s (AAPL) MacBook shipments at 4.9 million units in the third quarter of 2018, a decline of 8.5% year-over-year compared to 5.4 million units shipped in Q3 2017.
Intel (INTC) has been transitioning to the data-centric business, and DCG (Data Center Group) is its most profitable business segment, growing double-digit YoY (year-over-year). Intel’s DCG is seeing strong demand from the Cloud and Communications Service Providers as they prepare for AI and 5G. It’s also seeing growth in the Enterprise segment as companies increasingly adopt analytics, which is increasing their data-intensive workloads.
As we noted in the previous article, copper prices have sagged this year. Resilient mined copper supply and the US-China trade war have taken a toll on copper prices. The global growth outlook has also become murky amid the US-China trade tensions.
Analyst Rod Hall from Goldman Sachs (GS) has raised concerns over a slowdown in China’s (FXI) iPhone market. A slowdown in China would likely have a negative impact on Apple’s revenue over the next few quarters.
Apple (AAPL) is exposed to the US tariffs on Chinese (FXI) imports as it assembles almost all its products in China and imports them back to the United States. It is also vulnerable to the measures China might take to fight back the US tariffs. An article from the Wall Street Journal reported that China is considering restricting sales of materials, equipment, and parts required by US manufacturers like Apple.
Most analysts believe that the tariffs would not significantly impact semiconductor companies, but this cannot be said for Apple (AAPL), one of the biggest customers of the semiconductor industry. Apple has a huge dependency on both the United States and China.
Intel (INTC) is at the center of the data economy. Intel manufactures a majority of its semiconductors at its US facility and outsources assembly to Chinese companies. It also has a memory plant in China where it manufactures 3D NAND (negative AND) and 3D XPoint-based products.
The US and China (FXI) are leading in the field of 5G (fifth-generation), AI, and IoT. US companies Intel (INTC), Qualcomm (QCOM), and NVIDIA (NVDA) are working closely with Chinese giants like Baidu (BIDU) and Huawei in various aspects of AI and 5G. On the other side, the US government is imposing tariffs on components that are key for 5G deployment.
The second round of the US tariffs on $200 billion of Chinese (FXI) imports includes connected devices. The above HTS category includes modems, Wi-Fi routers, gateways, cell tower radios, Bluetooth-enabled devices, and any component used to connect to the Internet and mobile networks. According to a study by the CTA (Consumer Technology Association), 10.0%–25.0% tariffs on connected devices would increase the price of these products by 8.5%–22% and reduce their consumption by 6%–12%.
Fitbit stock (FIT) has declined significantly over the last few years. The stock touched an all-time high of $47.51 in August 2015 and has since fallen to $4.50. Fitbit stock declined 11% last month and is down 15.9% in October 2018. The stock has lost 21% in 2018. Fitbit was once the market leader in the global wearable market. However, it has since lost the position to Apple. A fall in product sales has impacted profitability as well.
The second round of 10% tariffs on $200 million in Chinese (FXI) goods, which went into effect on September 24, includes GPUs (graphics processing units). These tariffs could rise to 25% effective January 1, 2019, if no negotiations are resolved between the United States and China.
The stock of Chinese (FXI) Internet giant Alibaba (BABA) has declined 17.7% this year and is currently trading at $141.90. Alibaba stock has fallen 13.9% in October 2018 and has been impacted since founder Jack Ma announced his retirement in September. Analysts expect Alibaba’s revenue to rise 58% to $57.6 billion in fiscal 2019 (year ending in March) and 29% to $79.9 billion in 2020.
The US tariffs on Chinese goods would impact US companies that manufacture or import goods from China (FXI), including Micron Technology (MU). Micron Technology is the world’s third-largest memory chip maker and competes with South Korean rivals Samsung (SSNLF) and SK Hynix in terms of price and technology. As Samsung and Sk Hynix have a cost advantage over Micron in the DRAM (dynamic random-access memory) market, they can offer DRAM at a lower price than Micron and still remain profitable. The second round of 10% tariffs on $200 billion of Chinese imports includes SSDs (solid-state drives) and printed circuit board assemblies that integrate DRAM (dynamic random-access memory) modules to electronics devices.
China (FXI) is the global manufacturing hub of semiconductor and consumer electronics. The US tariffs would make goods manufactured in China expensive for US companies, encouraging them to move their operations or supply chains away from China. According to DRAMeXchange, 40% of the global server demand comes from North America as big cloud companies like Google and Amazon order in bulk.
Among these groups were SIA (Semiconductor Industry Association), SEMI (Semiconductor Equipment and Materials International), and the CTA (Consumer Technology Association). Despite this domestic opposition, President Donald Trump went ahead with the tariffs. The Trump administration stated that tariffs were important as there is no trade agreement that would put an end to China’s anti-competitive policies and better protect American intellectual property.