All of Wall Street is breathing a sigh of relief this morning after Apple Inc. (NASDAQ:AAPL) and China Mobile finally announced a deal to sell the iPhone on China Mobile Ltd. (NYSE:CHL) (HKG:941)’s network. Yes, this was the official announcement rather than all the speculations and somewhat misleading headlines we’ve seen recently.
China Mobile gives Apple, yuan a boost
Of course shares of Apple Inc. (NASDAQ:AAPL) surged in premarket trading, rising more than 3% after the official deal was announced. Percentagewise, this is one of the biggest moves Apple has made in recent weeks. China Mobile shares also rose after the deal was announced, edging upward nearly 3% at the New York Stock Exchange.
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Thanks to Apple’s massive market capitalization of nearly $500 billion and its overall influence on global markets, the upward movement of Apple stock is also giving other markets a boost. The deal with China Mobile affected the Chinese yuan, pushing it up to a 20-year high versus the U.S. dollar, according to Bloomberg Businessweek. Money market rates in China also increased for the seventh consecutive trading day. The seven-day repurchase rate in China rose to the highest level since June 20.
Apple pushes stock indexes higher
The MSCI All-Country World Index rose for the fourth day in a row, making this the longest string of consecutive increases in a month. The Stoxx Europe 600 Index also gained today, as did the MSCI All-Country Asia Pacific Index. The S&P 500 futures also did rose.
In the U.S., the yield gap between five-and 30-year securities was slimmed down for the fourth day, and in Europe, risk on corporate bonds also declined for the seventh consecutive day.
Apple – China Mobile deal affects other companies
Under the terms of Apple Inc. (NASDAQ:AAPL)’s deal with China Mobile, the iPhone will go on sale on the carrier’s network starting Jan. 17. Shares of ARM Holdings plc (NASDAQ:ARMH) (LON:ARM) edged higher as well in London, increasing 2.5%. The company makes chips for Apple’s iPhone, so this deal is a positive for it. Dialog Semiconductor plc shares also edged up more than 3% after the deal. (ETR:DLG)
Analysts weigh in on Apple’s deal
Many analysts see the biggest loser from Apple’s deal with China Mobile to be Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930). Apple and Samsung have a long history of rivalry at the high end of the smartphone market. Now that Apple’s phones are also on China Mobile Ltd. (NYSE:CHL) (HKG:941)’s network, Samsung has another major competitor to face off with. Apple and Samsung may see their marketing budgets grow as each tries to attract Chinese consumers from each other.
Some have boosted their price target for Apple Inc. (NASDAQ:AAPL) after the deal was announced. However, others aren’t so convinced. Some say lackluster iPhone 5C sales could have an effect on the two companies’ efforts to sell the iPhone on the world’s largest mobile network.