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Wall Street’s main indices fell on protests in major Chinese cities against strict Covid-19 policies, which raised concerns about economic growth while Apple fell on concerns about a hit to iPhone production. .
Apple shares fell 2.6% on concerns that turmoil in China will put pressure on a key manufacturing plant in the country and this will further weigh on affected iPhone production.
According to Bloomberg, the unrest in the country could lead to a production shortfall of about 6 million iPhone Pros this year.
The unusual demonstrations that took place in major Chinese cities over the weekend against the strict restrictions against Covid-19 are exacerbating concerns about the growth of the world’s second largest economy.
“These protests are proof that this is some kind of moving target: Will China really continue to try to limit the spread of Covid?” asked Tom Hainlin, national investment strategist at US Bank Wealth Management in Minneapolis.
“Or will they have more of the ‘living with Covid’ approach that we’ve seen in the US and other countries?” “We believe that Covid itself and China policy is one of the key variables for 2023 that would influence stock prices and investors,” Hainlin said.
The demonstrations occurred in several cities, but the one that worries Apple the most is Zhengzhou, where it has one of its main factories.
The situation is serious considering that the demonstrations and blockades due to the Covid zero policy take place prior to the Christmas shopping season. But Apple now depends on how Foxconn Technology Group, the Taiwanese company that produces its iPhones, can resume production.
According to experts, the problem will be noticeable in deliveries, since many buyers who order an iPhone for these dates could receive it until January 2023, if the protests do not gain more force.
“If these protests continue, they could disrupt supply chains and reopenings, something we already saw at the beginning of the year,” said Brian Klimke, director of investment research at Cetera Financial Group.
The numbers of new infections in China broke a record for the fifth consecutive day with 40,347 cases detected, of which 36,525 (90.5%) are asymptomatic. According to analysts, markets are concerned both about the impact of the virus and that the protests could have a negative effect on the Chinese economy.
With Reuters and EFE
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