{"id":58820,"date":"2023-09-09T04:11:33","date_gmt":"2023-09-09T08:11:33","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/apples-worst-case-scenario-in-china-isnt-so-bad-says-morgan-stanley\/"},"modified":"2023-09-09T04:11:35","modified_gmt":"2023-09-09T08:11:35","slug":"apples-worst-case-scenario-in-china-isnt-so-bad-says-morgan-stanley","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=58820","title":{"rendered":"Apple\u2019s worst-case scenario in China isn\u2019t so bad, says Morgan Stanley"},"content":{"rendered":"
\n

Apple Inc.\u2019s worst-case scenario in China doesn\u2019t look that bad, according to a Morgan Stanley analyst \u2014 and that\u2019s unlikely to occur in the first place. <\/p>\n

Shares of Apple
\n AAPL,
\n +0.35%<\/bg-quote>
\n were recovering slightly Friday after suffering two sessions of declines related to fears about the company\u2019s China business. A Wall Street Journal report said that China was banning the use of iPhones for work purposes by government officials, while a Bloomberg News story discussed the potential for those bans to expand to some other state-affiliated workers. <\/p>\n

\n

Plus, Chinese technology company Huawei recently came out with a new phone that looks more competitive in the market. Apple is thought to have won market share at Huawei\u2019s expense in recent years as Huawei was weighed down by U.S. sanctions that limited its ability to obtain technology for its phones.<\/p>\n

Read:<\/strong> Apple\u2019s newest China challenge could be a blast from the past<\/p>\n

The stock was up 0.9% in morning action after shedding 6.4% across the prior two trading days in a selloff that Morgan Stanley\u2019s Erik Woodring deemed \u201coverdone.\u201d<\/p>\n

In Woodring\u2019s view, Wall Street is worried that the latest issues in China signal the potential for the country to become more nationalistic, which could jeopardize the $30 billion-plus in operating profit that Apple derives from the region. <\/p>\n

\u201cWe believe that\u2019s an overextrapolation by the market, as Huawei\u2019s 5G smartphone shipments will be greatly limited by supply constraints (and potential further technology restrictions), and iPhone curbs by the Chinese government aren\u2019t necessarily new, reportedly having begun as far back as 2020.\u201d <\/p>\n

Meanwhile, he noted that Apple is responsible for the direct and indirect employment of millions of people in China, making the company \u201ccritical to the Chinese economy.\u201d<\/p>\n

See also:<\/strong> Here\u2019s why Wall Street may be overreacting about Apple\u2019s China\u2019s challenges<\/p>\n

\u201c[W]hile the potential for a broad decoupling between Apple and China in this multipolar world clearly exists, we don\u2019t believe recent headlines are necessarily foreshadowing this \u2018worst case\u2019 scenario,\u201d Woodring wrote. \u201cAs a result, we\u2019d conclude Apple\u2019s recent stock move is indeed overdone as it implies Apple loses ~70% of its iPhone shipments in China, a highly draconian and unlikely scenario.\u201d<\/p>\n

That unlikely worst-case scenario would mean revenue downside of 4% and earnings-per-share downside of 3%, and it assumes Apple gives back all the market share it picked up from Huawei in the past three years.<\/p>\n

Don\u2019t miss:<\/strong> The iPhone 15 is coming. Here\u2019s everything to expect from Apple\u2019s big event.<\/p>\n

Woodring wrote that he is upbeat about the strength of Apple\u2019s ecosystem in the country, noting that many consumers are likely \u201centrenched\u201d as they own multiple Apple devices. <\/p>\n

\u201cGovernment curbs may force some switching to domestic vendors, but we assume most Chinese government officials (or at [state-owned enterprises]) already own a smartphone from domestic [manufacturers],\u201d he said. <\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Apple Inc.\u2019s worst-case scenario in China doesn\u2019t look that bad, according to a Morgan Stanley analyst \u2014 and that\u2019s unlikely to occur in the first place. Shares of Apple AAPL, +0.35% were recovering slightly Friday after suffering two sessions of declines related to fears about the company\u2019s China business. A Wall Street Journal report said […]<\/p>\n","protected":false},"author":1,"featured_media":58821,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-58820","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nApple\u2019s worst-case scenario in China isn\u2019t so bad, says Morgan Stanley | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Apple Inc.\u2019s worst-case scenario in China doesn\u2019t look that bad, according to a Morgan Stanley analyst \u2014 and that\u2019s unlikely to occur in the first place.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=58820\" \/>\n<meta property=\"og:locale\" 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