Chinese economic woes wipe $40 billion off Apple's value

Despite reporting a sharp increase in global sales and profits, Apple saw $40 billion of its value wiped off due to growing concerns about the health of the Chinese economy.

On Wednesday, the 5% fall in share price in the world’s biggest company was mirrored by a slide in shares in mining and commodity firms to their lowest levels since the stock market crash of 2008. Investors regard the mining and commodities industries as vulnerable to a slowdown in the world’s second biggest economy.

Oil, gold, zinc, copper and platinum prices were all down on a day when markets were dominated by second quarter results from Apple that showed strong growth but were less impressive than dealers had been anticipating.

Despite a doubling of sales of iPhones to China’s growing middle class over the past year, financial markets fear the recent official Chinese figures showing economic growth of 7% are exaggerated and that consumer demand may flag in the coming months.

Tim Cook, Apple’s chief executive, said he remained upbeat about prospects for China, but disappointed analysts by refusing to give details of sales of the Apple Watch, which was launched in April. In the past, Cook has emphasised the importance of Chinese growth to Apple’s future growth.

The latest iPhones are especially popular in China. In greater China—defined by Apple as China plus Hong Kong and Taiwan—revenue more than doubled to $13.23 billion. For the iPhone, sales rose 87% in greater China compared with 5% growth in the overall market, according to Apple.

But the Chinese stock market has been focus of world attention in recent weeks after a collapse beginning in mid-June that prompted companies to suspend their shares to prevent even more precipitous declines. Retail investors – an estimated 90 million of them – had poured into the market, which has fuelled concerns that their losses may reduce their ability to generate demand for products in the future.

Weaker exports from emerging markets, including China, were the main factor behind a 1.2% monthly fall in world trade volumes in May. The decline is part of a recent sluggish trend that has convinced some economists that globalisation has stalled in recent years.

Commodity prices have been supported by the rapid industrialisation of China, but policymakers in Beijing have been trying to slow the economy and make its growth better balanced. Copper prices were trading on Wednesday at almost their lowest level in almost six years, while US oil prices dipped to $50 a barrel. Analysts know the metal as “doctor copper” for its ability to reflect the underlying state of the global economy.