Could China’s stock-market collapse hit sales of smartphones in the world’s fast-growing super economy?
Investors certainly think so, dumping shares in iPhone chip designer ARM Holdings, down 8p at 1037p.
China is now Apple’s biggest market for smartphones, overtaking US sales during the first quarter of 2015. Its sales in what is now the world’s biggest smartphone market surged 71% in the three months.
That is good news for UK-based ARM but things have taken a turn in recent weeks.
The Chinese stock market has lost around a third of its value, forcing authorities to ban selling, as Apple’s own share price decline shows.
The fear is that consumer spending on pricey technology such as phones will drop as their investments continue to fall in value.
UBS analyst Steve Milunovich played down the concerns, estimating that equities only account for about 20% of household wealth in China or 12-13% if property is included.
“A slowing Chinese economy is a risk for Apple. However, UBS economist Tao Wang sees limited impact of the stock-market turmoil on the economy,” he said.
The US-based number cruncher called the link between consumption and stock prices “ambiguous”, adding that he thinks “Apple is okay for now”.
ARM found itself at the bottom of the FTSE 100, which rose 68.7 points to 6650.33 on renewed optimism about a deal for Greece over the weekend.
Greek debt crisis in pictures
Companies with exposure to Greece gained ground, with Vodafone up 4.85p to 234.9p, and Thomson and First Choice owner TUI 8p ahead at 1047p.
This came despite the Foreign Office’s warning for all Britons to leave Tunisia in case of another terror attack.
Mining giants BHP Billiton, up 24p to 1230p, and Glencore, rising 2p to 242.95p, benefited as China’s measures to prevent further stock-price falls appeared to be working.
Citigroup analysts upgraded Glencore to buy and Anglo American, up 9.4p to 868.6p, to neutral, calling the sector sell-off overdone.
IT consulting firm Kainos rose to 170.45p after floating at 139p.
AIM-listed ReNeuron, up 0.63p at 5.6p, raised £68.4 million at 5p a share to spend on its stem-cell work.
Star fund manager Neil Woodford backed the fund raising and now owns 35.5% of the company.
He has been granted a waiver of the normal takeover rules, meaning his fund does not have to make a formal offer for the rest of the shares.
