China is the third largest market for Apple. Worry about the impact of the trade war on Apple intensified after the United States put Huawei Technologies on its “black list” last week. Now China can strike back at Apple and its supply chain.
According to the most pessimistic scenario of Goldman Sachs, Apple’s profit could be reduced by 29% if China prohibits the sale of the company’s products in its territory.
This scenario is unlikely, but Apple shares will certainly suffer from the escalation of the conflict. Investors should wait for a more convenient point to enter the market. This moment may come in June, as Trump and Chinese leader Xi Jinping should meet at the G20 summit in Japan.
Although Tesla (NASDAQ TSLA) has already become a very risky investment over the past few months, Wall Street analysts have strengthened their bearish view of the company since the escalation of the trade conflict between the US and China.
Morgan Stanley analyst Adam Jonas said this week that, in the worst case, Tesla shares could fall to $ 10. The trade war worsens the outlook for demand from the Chinese market, from which the company hopes to get about $ 9 billion from 2020 to 2024.
Therefore, the entire sector has suffered since the escalation of the trade war. The strongest blow must come on Qualcomm (NASDAQ QCOM). Over the last fiscal year, the Chinese market provided two thirds of the microelectronics manufacturer’s revenue.
Qualcomm mainly develops its chips in the United States, but produces them through a network of subcontractors in Taiwan, Korea and China. These chips are then returned to China, where they are used to assemble various devices (such as smartphones).
Over the last month, QCOM shares have lost about 20% of their value to $ 64.4. The greatest damage was caused by the decision of the district court, which agreed with the legality of the accusations by the Federal Trade Commission regarding the company’s anti-competitive practices. Combined with dependence on the Chinese market, this makes the company’s stock vulnerable to further decline.