Samsung, tech suppliers sink on smartphone woes but Asia stocks gain

January 28, 2016
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The 40 percent fall in Samsung's net profit and Apple's report fuelled fears about the saturated smartphone market and the impact on smaller firms that rely on their ongoing popularity/FILE
The 40 percent fall in Samsung’s net profit and Apple’s report fuelled fears about the saturated smartphone market and the impact on smaller firms that rely on their ongoing popularity/FILE
Hong Kong, China, Jan 28 – Shares in tech suppliers sank in Asia Thursday as South Korean giant Samsung Electronics posted a huge fall in profit, a day after rival Apple recorded its weakest ever rise in iPhone sales.

The 40 percent fall in Samsung’s net profit and Apple’s report fuelled fears about the saturated smartphone market and the impact on smaller firms that rely on their ongoing popularity.

Adding to the concerns, Samsung said it expected 2016 to throw up continued challenges, which was in line with a warning from Apple that it saw year-on-year sales of the iPhone falling for the first time this quarter. Apple dived 6.5 percent in US trade.

Samsung tumbled 2.6 percent in the morning in Seoul. Among regional suppliers, Tokyo-listed Alps Electric — which Wednesday cut its profit forecast because of weak smartphone sales — collapsed more than 17 percent. Japan Display lost 6.7 percent and TDK 6.4 percent.

LG Display in Seoul was 2.6 percent off.

The losses came despite gains in most Asian markets after another day of volatility. They also followed a sell-off on Wall Street after the Federal Reserve left investors to speculate about another interest rate hike.

After concluding its first meeting since lifting rates in December, the US central bank kept rates unchanged and said growth in the world’s number one economy slowed late last year and it was concerned about ongoing global weaknesses.

– Focus on BoJ meeting –

But despite the turmoil that has wracked world markets so far this year, policymakers added that they expected inflation — softened by falling oil prices — would rise toward its 2.0 percent target in the medium term. The comment was seen as keeping the Fed’s option open for another hike in March.

“With investor sentiment quite poor and fixated on the negatives, they’ll likely latch onto the Fed’s focus over global risks,” Mitsushige Akino, an executive officer at Ichiyoshi Asset Management, told Bloomberg News.

“However, rather than a hawkish statement, I think we got one that was market friendly. And that should impact stocks over the longer run.”

Tokyo’s Nikkei index shed 0.7 percent, while Shanghai ended 2.9 percent down, with ongoing worries about the domestic economy continuing to play on investors’ minds.

Mainland Chinese investors seemed unmoved by the central bank’s decision to pump $52 billion into financial markets to ease liquidity problems leading up to the Lunar New Year break. The Shanghai market plunged more than six percent Tuesday despite an injection of $67 billion.

However, Hong Kong jumped 0.8 percent thanks to late buying, Sydney added 0.6 percent and Seoul gained 0.5 percent, while there were also advances in Taipei, Manila, Singapore and Wellington.

Next up is the Bank of Japan’s policy meeting, which concludes Friday. While expectations are that it will not move just yet, its statement will be pored over for an idea about policymakers’ thinking as Japan’s economy stumbles and local stock markets are jostled by the global rout.

On oil markets, both global contracts turned lower with US benchmark West Texas Intermediate down 1.6 percent and Brent 1.5 percent off.

They posted gains Wednesday, even after a report showed US stockpiles surged last week. Analysts said the rally was in reaction to the fact the rise was not as big as expected.

In early European trade London eased 0.2 percent, Frankfurt lost 0.6 percent and Paris dipped 0.4 percent.

– Key figures around 0830 GMT –

Tokyo – Nikkei 225: DOWN 0.7 percent at 17,045.45 (close)

Shanghai – Composite: DOWN 2.9 percent at 2,655.66 (close)

Hong Kong – Hang Seng: UP 0.8 percent at 19,195.83 (close)

London – FTSE 100: DOWN 0.2 percent at 5,976.40

Euro/dollar: DOWN at $1.0877 from $1.0892 Wednesday

Dollar/yen: UP at 118.84 yen from 118.67 yen

New York – Dow: DOWN 1.4 percent at 15,944.46 (close)

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