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.


Arab News recording exposes Nissan lawyer’s lie on IMF bailout for Lebanon

Updated 01 June 2020

Arab News recording exposes Nissan lawyer’s lie on IMF bailout for Lebanon

LONDON: Arab News has published the recording of an interview with a Nissan lawyer after he denied saying that a bailout of Lebanon by the International Monetary Fund (IMF) was linked to the extradition of fugitive tycoon Carlos Ghosn.

The former Nissan chairman fled to Beirut in December from Japan, where he faced charges of financial wrongdoing.

In a story published in Arab News Japan on Saturday, Sakher El Hachem, Nissan’s legal representative in Lebanon, said the multibillion-dollar IMF bailout was contingent on Ghosn being handed back to Japan. 

The lawyer said IMF support for Lebanon required Japan’s agreement. Lebanese officials had told him: “Japan will assist Lebanon if Ghosn gets extradited,” the lawyer said

“For Japan to agree on that they want the Lebanese authorities to extradite Ghosn, otherwise they won’t provide Lebanon with financial assistance. Japan is one of the IMF’s major contributors … if Japan vetoes Lebanon then the IMF won’t give Lebanon money, except after deporting Ghosn.”

On Sunday, El Hachem denied making the comments. “The only thing I told the newspaper was that there should have been a court hearing on April 30 in Lebanon, but it was postponed because of the pandemic,” he said. In response, Arab News published the recording of the interview, in which he can be clearly heard making the statements attributed to him. 

Japan issued an arrest warrant after Ghosn, 66, escaped house arrest and fled the country.