iPhone disappointment hits suppliers, accelerates Taiwan outflows

Apple Inc.’s recent releases are getting a wrong impression, at least from investors in the Asian suppliers of the firm; that’s not good news for Taiwan equities.

Hon Hai Precision Industry Co., an Apple assembling company, has dropped 10 percent in Taipei since Apple launched its new device collections this month. Other suppliers in the region, including South Korea’s LG Innotek Co. and Taiwan’s Pegatron Corp. have fallen more than 13 percent.

Apple’s major chip-maker, Taiwan Semiconductor Manufacturing Co., and Hon Hai cumulatively make up a quarter of the total weighting by Taiex, while over half of the gross domestic product was accounted by exports.

Orders disappoints the market

Vice president at Capital Investment Management, based on Tapei, Alan Tseng, says orders for the recent iPhone have disappointed the market, and foreign investors may have no choice than continue net selling Taiwan stocks. He added that the retreat of Apple suppliers reduced the benchmark index and may even lower it more in the coming months.

Investors from overseas pulled a net $677 million last week from Island’s stock market, marking the highest outflows in the last three months. Earlier predictions that the iPhone would increase Taiwan earnings had left the Taiex to a 17-year high as inflow increased.

The preorders of the iPhone 8 are visibly lower than that of iPhone 7 and iPhone 6, as written by Jun Zhang, a Rosenblatt’s analyst in a note last week. First feedback shows iPhone 8 volume is less than its predecessors in China and U.S.

Hon Hai was low 1.9 percent in Taipei. AAC Technologies Holdings Inc. dropped 4.8 percent in Hong Kong, and China Airlines retreated 3.9 percent.