For Warren Buffett, sinking Apple shares a wish come true

Buffett in recent years has lamented missing the boat on buying shares in US technology giants. (File/AFP)
Updated 03 January 2019
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For Warren Buffett, sinking Apple shares a wish come true

  • Apple’s warning on Wednesday about weak iPhone demand in the holiday quarter due to slower sales in China sent its stock down 7.5 percent during after-hours trading
  • Apple’s stock market value has tumbled to below $700 billion from over $1.1 trillion at its peak in October

SILICON VALLEY: Billionaire Warren Buffett has said he would love to see Apple Inc. shares decline in price so he could buy more. He is getting his wish.
Apple’s warning on Wednesday about weak iPhone demand in the holiday quarter due to slower sales in China sent its stock down 7.5 percent during after-hours trading. Class B shares of Buffett’s Berkshire Hathaway Inc. traded down 2 percent in the same session on Wall Street.
Buffett, the folksy Nebraska investor known more for buying railroads, energy firms and classic American corporate brands than for his acumen picking tech stocks, in recent years has lamented missing the boat on buying shares in US technology giants. He admitted an earlier investment in IBM Corp. was not one of his best.
Yet Buffett has made Apple a centerpiece of his portfolio of other company’s stocks, touting his own use of the Cupertino, California-based company’s products and saying at his annual shareholders’ meeting in Omaha last May, “We would love to see Apple go down in price,” so he could buy more at a bargain.
Buffett sees Apple more as a consumer stock than a tech stock, reflecting the iPhone’s status as a must-have possession for so many people.
Including its after-hours drop on Wednesday, Apple’s stock market value has tumbled to below $700 billion from over $1.1 trillion at its peak in October. Although Apple has fallen behind Amazon.com Inc. and Microsoft Corp. in value, it remains one of Wall Street’s most widely held companies.
Shares of Berkshire itself have held up well even as the broader market sank last quarter. Last year, Berkshire returned 2.8 percent, while the S&P 500 fell 4.4 percent, including reinvested dividends.
But the $3 billion hit to Berkshire’s Apple shares in evening trading on Wednesday could show in future reported earnings. Those figures do not reflect any long-term gains on Berkshire’s investments, and Buffett has encouraged investors to ignore the profit statistic mandated by US accounting practices.


Singapore woes ring trade alarm bells

Singapore has long been viewed as a barometer of the global demand for goods and services. (AFP)
Updated 22 July 2019
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Singapore woes ring trade alarm bells

  • Governments have slashed economic growth forecasts, and gauges in several countries measuring activity in the manufacturing and services sectors paint a bleak picture

SINGAPORE: A plunge in exports and the worst growth rates for a decade have fueled concerns about the outlook for Singapore’s economy, with analysts saying the figures offer a warning that Asia is heading for a slowdown as China-US tensions bite.
While it may be one of the smallest countries in the world, the export hub is highly sensitive to external shocks and has long been viewed as a barometer of the global demand for goods and services.
The affluent city-state is highly dependent on trade and has traditionally been one of the first places in Asia to be hit during global downturns — with ripples typically spreading out across the region. The latest signs are not good. In June, exports collapsed 17.3 percent from a year earlier, the fastest decline in more than six years, led by a fall in shipments of computer chips.
That followed a shock 3.4 percent quarter-on-quarter contraction in GDP in the second quarter. Year-on-year growth came in at just 0.1 percent, the slowest pace since 2009 during the global financial crisis.
“Singapore is the canary in the coal mine,” Song Seng Wun, a regional economist with CIMB Private Banking, told AFP. “And what it tells us is that it is a tough environment.”
To warn of danger, miners used to bring caged canaries underground with them as the birds would die in the presence of even a small amount of poisonous gas — signaling to workers that they should make a swift exit.

BACKGROUND

In June, exports in Singapore collapsed 17.3 percent from a year earlier, the fastest decline in more than six years, led by a fall in shipments of computer chips.

While steadily weakening growth in China is partly to blame for a slowdown in exports, analysts say the trade war between the US and China has dramatically worsened the situation.
While Singapore — a transit point for products heading to and from Western markets as well as the Asian base for manufacturers of some hi-tech goods — may be showing the strain most, negative data has emerged throughout the region.
Exports have been slipping across Asia. In India they plummeted 9.7 percent in June, in Indonesia, Southeast Asia’s biggest economy, they dropped 8.9 percent in the same month while in South Korea they slipped 10.7 percent in May.
Governments have slashed economic growth forecasts, and gauges in several countries measuring activity in the manufacturing and services sectors paint a bleak picture.
Central banks are moving to spur domestic consumption, with Indonesia and South Korea cutting interest rates Thursday, the latest in Asia to lower borrowing costs.
Singapore’s central bank is seen as likely to ease monetary policy at an October meeting, and some economists are predicting the country could fall into recession next year.
“There are no winners in this trade war. While most of the attention has focused on the trade conflict between China and the US, the damage has not been confined to these two economies,” business consultancy IHS Markit said in a commentary.