Apple bombshell sparks currency ‘flash crash’ as investors abandon tech stocks

Flagging demand for iPhones in China has heightened investor fears surrounding Apple’s most profitable product amid global economic weakness and a trans-Pacific tariff dispute. (AP)
Updated 04 January 2019

Apple bombshell sparks currency ‘flash crash’ as investors abandon tech stocks

  • It’s Apple’s first downgrade in nearly 12 years, blaming weaker iPhone sales in China
  • “No one wants to take any risk because none of the uncertainties we are facing have been lifted, whether it’s Brexit, this trade war, or growth”

LONDON: Apple’s rare warning on revenue rocked financial markets on Thursday, as investors sought safety in bonds and less risky assets amid renewed concerns about slowing global economic and corporate growth.

Asian and European shares fell sharply, led by a sell-off in technology stocks, after Apple cut its revenue forecast, its first downgrade in nearly 12 years, blaming weaker iPhone sales in China.

The news also jolted currency markets and German government bond yields held close to their lowest in over two years.

“For the moment, investors have reacted by going into non-risky assets,” said Philippe Waechter, chief economist at Ostrum Asset Management, in Paris.

“No one wants to take any risk because none of the uncertainties we are facing have been lifted, whether it’s Brexit, this trade war, or growth.

“Investors are putting their heads in the sand and waiting,” Waechter said.

Apples shares fell dramatically in after-hours trade and those listed in Frankfurt were down by 8.6 percent in early European deals.

The news sparked a “flash crash” in holiday-thinned currency markets as growing concerns about the health of the global economy, particularly in China, sent investors scurrying into the haven of the Japanese yen, which was poised for its biggest daily rise in 20 months.

Apple’s warning came after data earlier this week showed a deceleration in factory activity in China and the euro zone, indicating the ongoing trade dispute between the US and China was taking a toll on global manufacturing.

Major European bourses were firmly in negative territory by midmorning — Frankfurt’s DAX, with its exposure to Chinese trade and tech-heavy constituents, was the biggest faller and down as much as 1.2 percent, while the CAC40 in Paris dropped by 1.1 percent and London eased by 0.4 percent.

Chipmakers who supply parts to Apple were the worst hit, sending technology stocks to their lowest since February 2017. Overnight, shares in China and Hong Kong see-sawed between gains and losses as investors braced for Beijing to roll out fresh support measures for the cooling Chinese economy.

“Chinese authorities have the luxury of having control not just of the fiscal parts of the government tool case, but also the monetary parts ... and I suspect the Chinese authorities will make use of that,” said Jim McCafferty, head of equity research, Asia ex-Japan, at Nomura.

China’s central bank said late on Wednesday it was adjusting policy to benefit more small firms that are having trouble obtaining financing, in its latest move to ease strains on the private sector.

While more fiscal and monetary policy support had been expected in coming months on top of modest measures last year, some analysts wonder if more forceful stimulus will be needed.

Currency markets saw a wild spike in volatility in early Asian trade, with the yen moving sharply higher against the US dollar, triggering stop-loss sales of US and Australian dollars.

The dollar was last 1 percent weaker against the yen at 107.77, having earlier fallen as low as 104.96, its lowest level since March 2018. The Australian dollar at one point hit levels against the Japanese yen not seen since 2011.


Gulf Marine CEO quits after review sparks profit warning

Updated 22 August 2019

Gulf Marine CEO quits after review sparks profit warning

  • Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence

DUBAI: Gulf Marine Services said on Wednesday Chief Executive Officer Duncan Anderson has resigned as the oilfield industry contractor warned a reassessment of its ships and contracts showed profit would fall this year, kicking its shares 12 percent down.

The Abu Dhabi-based offshore services specialist said a review by new finance chief Stephen Kersley of its large E-class vessels operating in Northwest Europe and the Middle East pointed to 2019 core earnings of between $45 million and $48 million, below $58 million that it reported last year.

A source familiar with the matter told Reuters that Anderson, who has served as CEO for 12 years, was asked to step down. Anderson could not be reached for comment.

The company, which in the past predominantly operated in the UAE, expanded operations and deployed large vessels in the North Sea and Saudi Arabia nine years ago and listed its shares in London in 2014.

Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence.

The North Sea has seen a revival in production in recent years due to new fields coming on line and improved performance by operators following the 2014 oil price collapse.

Still, the basin’s production is expected to decline over the next decade, according to Britain’s Oil and Gas Authority.

“(The CFO’s) review has coincided with a pause in renewables-related self-propelled self-elevating support vessels activity in the North Sea, which will impact several of the higher day-rate E-Class vessels,” Investec wrote in a note.

Gulf Marine appointed industry veteran Kersley as chief financial officer in late May as it sought to halt a slide which has seen the company’s shares fall nearly 80 percent last year and another 23 percent so far this year.

The company said market conditions remained challenging and that it was still in talks with its financial advisors regarding a new capital structure.

“Management, the new board and the group’s advisors, have been in negotiation with the group’s banks on resetting its capital structure and progress has been made,” it said in a statement.

Last year, Gulf Marine said contracts were delayed into 2019 as the company was seen to be in breach of certain banking covenants at the end of 2018.

The company said it was still in talks with its banks and individual lenders with hopes of getting a waiver or an agreement to amend the concerned covenants.