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 per cent 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 per cent in US trade.
Samsung tumbled 2.6 per cent 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 per cent. Japan Display lost 6.7 per cent and TDK 6.4 per cent. LG Display in Seoul was 2.6 per cent 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.
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 per cent 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 per cent, while Shanghai ended 2.9 per cent down, with ongoing worries about the domestic economy continuing to play on investors’ minds.
