Wednesday, 11 September 2013
UPDATE 1-Asian supplier shares fall as Apple's 5C iPhone stirs doubts
* Apple to sell lower-cost iPhone at $730 in China
* Concerns iPhone 5C demand will be weak in emerging markets
* Shares in Chinese, Japanese suppliers fall (Updates with iPhone offer price in China, analyst's comments, Chinese and HK-listed suppliers)
By Dominic Lau and Clement Tan
TOKYO/HONG KONG, Sept 11 (Reuters) - Shares of Apple Inc's component suppliers in Asia came under pressure on Wednesday as investors lock in recent gains on concerns that its lower-cost iPhone is still too expensive for its target audience in China and other emerging markets.
On Tuesday, Apple unveiled its flagship iPhone 5S with a fingerprint scanner to help it stand out among the smartest of phones. It also introduced the colourful 5C plastic model for emerging markets.
The cheaper, plastic-backed iPhone 5C will sell for 4,488 yuan ($730) in China, almost $200 more than the United States retail price of $549 and only 800 yuan less than its top-of-the-line sibling, the 5S.
"People were all expecting the 5C would be a low-cost model, but it doesn't look like it will be too competitive now," said Jackson Wong, Tanrich Securities vice president for equity sales in Hong Kong. "Everybody is now looking to the China Mobile announcement, which can happen anytime now."
Markets have been speculating that the California-based tech giant is on the verge of signing a distribution pact with China Mobile Ltd, the country's biggest wireless carrier with more than 740 million subscribers. China Mobile shares were down 1.4 percent.
Among the Japanese component makers, Taiyo Yuden Co Ltd , Murata Manufacturing Co Ltd and Ibiden Co Ltd were down between 1.4 and 2.9 percent.
Hong Kong-listed AAC Technologies Holdings Inc sagged 5.2 percent and Goertek Inc, which supplies speakers to Apple, plunged the maximum 10 percent limit in Shenzhen, while Taiwan's Hon Hai Precision Industry Co Ltd eased a more modest 1.3 percent.
Traders also said the cheaper model, which will go on sale on Friday and come in five colours - blue, green, pink, yellow and white - could crimp margins at suppliers.
"In terms of components, it's all a volume game with low margins. It's not a huge positive for component makers," a senior dealer at a foreign bank in Tokyo said.
Apple has been losing ground to Samsung Electronics Co Ltd and Huawei Technologies Co Ltd in emerging markets like China and India.
Other Japanese part suppliers that were hit on Tuesday included Mitsumi Electric Co Ltd, Japan Aviation Electronics Industry Ltd, Minebea Co Ltd, Alps Electric Co Ltd and Nidec Corp, off between 1 and 4.3 percent.
BUYING OPPORTUNITY
Another Tokyo-based trader disagreed that margins were under threat, saying Apple has long been squeezing its part suppliers so if the tech giant can increase sales, it would benefit component makers as well.
"It's not negative for the component makers because it's about volume. If anything, it is positive for component makers because you are now arguably going to be selling even more iPhones," he said, adding that the selloff in the Japanese component makers offered buying opportunities.
"The potential you've got here is not that you are going to be selling fewer iPhone 5S...What you are doing here is attacking a brand new market," the trader said. "Now they have come up with a mid-range phone because there is a huge market for entry level smartphones."
According to Thomson Reuters StarMine, suppliers Taiyo Yuden, Murata and Ibiden were 14 to 37 percent below their intrinsic value, which evaluates a stock based on projected growth over the next decade, using a combination of analyst forecasts and industry growth expectations.
($1 = 6.12 Chinese yuan) (Editing by Matt Driskill)
Australia shares near 4-mth highs, risk appetite improves on Syria news
(Adds analysis, quotes, stocks on the move)
SYDNEY, Sept 11 (Reuters) - Australian shares climbed 0.5 percent to near four-month highs on Wednesday after Wall Street rose overnight as geopolitical tensions eased when Syria agreed to give up its chemical weapons, but a modest fall in gold capped gains.
The push higher was driven by financials with Westpac Banking Corp up 0.4 percent while National Australia Bank added 1 percent. Top lender Commonwealth Bank of Australia edged 0.3 percent higher.
The Big Four banks have had a stellar year so far as record profits and high dividend yields have driven their share price up an average of 25 percent, outperforming the broader market, which is up 12.4 percent.
The S&P/ASX 200 index rose 24.1 points to 5,225.3 by 0138 GMT, its highest point since May 20. The benchmark rose 0.4 percent on Tuesday.
Analysts said the new developments in Syria reduced risk for financial markets as Syria accepted a Russian proposal to give up its chemical weapons to win a reprieve from U.S. military strikes.
"Risk appetite has improved," said Tim Radford, global analyst at Rivkin Securities in a note to clients.
"It could continue improving, as investors stop worrying about Syria and next week's FOMC meeting amid an absence of important economic news in the near-term."
Elsewhere defensives also posted gains. Top telecommunications provider Telstra Corporation Ltd rose 0.5 percent while mass-market retailer Wesfarmers Ltd added 0.3 percent.
Gold miners fell after gold posted a loss of 1.5 percent overnight, paring broader gains. Newcrest Mining Ltd lost 3.2 percent while Regis Resources Ltd dropped 3.8 percent.
The benchmark is testing a year-to-date high of 5,249.6 points hit on May 15 as investors bet the newly-elected conservative Coalition government would restore stability to the market.
"Some policies will have benefits, if the new government is able to repeal the carbon tax there will be some impacts across industries such as the energy sector and the utilities sector," said Martin Lakos, division director at Macquarie Bank.
"Their desire to remove red and green tape will help the Australian economy generally so it's more broad based in that respect."
Triton Minerals Ltd jumped 7.1 percent to one-month highs of A$0.06 after the company said it has identified several high grade graphite intersections at its Cobra Plains project.
Metals of Africa plunged 30.8 percent to A$0.09 after announcing a capital raising of $2.5 million before costs, and at a discounted price of A$0.10 per share.
Investor sentiment was buoyed by a survey showing a measure of Australian consumer confidence jumped to a 33-month peak in September, and on Wall Street rising overnight, with the S&P 500 index advancing for its longest stretch since early July.
New Zealand's benchmark NZX 50 index slipped 0.1 percent or 6.1 points to 4,621.6.
(Reporting by Thuy Ong; Editing by Eric Meijer)