Apple (AAPL) shares suffered a significant decline following the news that the Chinese government has banned the sale of iPhones in the country. A bearish close this week could further exacerbate the pain for the company’s stock.
AAPL: Weekly Chart
Apple shares fell to $177 this week, in line with a decline in the Nasdaq Composite Index. There is a risk of further losses, with support at $170 and a potential downside target of $150.
Following news that China had forbidden employees at central government organisations from using or carrying iPhones to work, Apple stock fell. According to The Wall Street Journal, Chinese officials received orders from their superiors in meetings or chat rooms at work. With Apple shares plunging by 3% near the close and the Nasdaq falling by 0.70 percent, the news put additional pressure on American indices.
Analysts stated on Wednesday that the most recent actions from Beijing demonstrated that China was not prepared to offer any leniency to US companies as the country endeavours to lessen its reliance on American technology.
“Even Apple is not immune… in China, where it employs hundreds of thousands, if not more than a million workers, to assemble its products through its relationship with Foxconn,” DA Davidson analysts said.
This “should inspire companies to diversify both their supply chains and customer concentrations to be less dependent on China in the event the tensions get worse”.
The recent ban could exacerbate concerns among foreign companies operating in China as tensions between the US and China continue. The WSJ report did not name any other smartphone makers affected by the ban, and China’s State Council Information Office did not immediately respond to Reuters’ requests for comment.
China’s latest restriction is comparable to the US efforts to ban Huawei and TikTok. Investors should be cautious of the ramifications of further bans, and a weekly close below $182 could mean further losses for AAPL.