Apple (AAPL) may be the most high profile victim, but a slew of other top stocks have been hit by a slowdown in the Chinese economy, including Starbucks (SBUX), FedEx (FDX), Ford (F), Tiffany (TIF) and LVMH (LVMUY).
X
Weakening domestic demand and the ongoing trade war with the U.S. have dealt a double whammy to the Chinese economy. This was underlined Wednesday, when the country's Caixin manufacturing purchasing managers' index contracted for the first time in 19 months in December.
Starbucks Stock
China is the centerpiece of the coffee giant's expansion plans going forward. Last May, Starbucks said it planned to ramp up store openings to 600 annually, with a view to having 6,000 cafes in the country.
But last month the company said same-store sales growth in China could be as low as 1% in the long term. This figure is well below the 3%-4% growth seen for the U.S. and the rest of the world.
In the fiscal year that ended in September, Starbucks reported Chinese same-store sales growth of 2%.
Shares fell 4.3% to 61.53 on the stock market today. Starbucks stock has built an eight-week flat base, MarketSmith analysis shows, and is shooting for a 69.08 buy point. Its relative strength line has been moving sideways in recent weeks, and it is currently trailing its 50-day moving average. But the stock still has a strong IBD Composite Rating of 95.
FedEx Stock
FedEx was forced to cut its profit forecast in December, just months after giving it a hike. The shipping giant blamed global trade issues, which have been fueled by the U.S.-China trade spat. CEO Frederick Smith claimed the bulk of the issues hitting the company were because of "bad political choices." The slowdown in the Chinese economy comes after FedEx opened a hub in Shanghai last January.
Shares sank 3.7% to 157.19 Thursday and have plunged more than 40% from a recent high. FedEx stock is currently well below both its 50- and 200-day lines.
Ford Stock
The slowing Chinese economy, the trade war, and a crackdown on unconventional lending practices have all affected Ford sales. However, the company has also failed to keep pace with changing consumer tastes.
Ford sales in China tumbled more than 50% in November, and sales through the first 11 months of 2018 were down more than 30% vs. the same period a year ago.
Shares dipped 1.5% to 7.78 after Ford reported strong U.S. auto sales for December.
Tiffany Stock
Tiffany had been the toast of Wall Street in the first half of 2018 due to improving performance, which was partially driven by demand from Chinese tourists.
However, it has since been hit by the weaker Chinese economy, with the jewelry giant reporting lackluster sales in November. This was blamed on a "clear pattern" of Chinese shoppers cutting back. New York-based Tiffany said Chinese tourists spent less in the Americas and in Hong Kong, while Japan sales also cooled.
Shares were down 2.7% Thursday and have plunged more than 40% since a July high.
LVMH Stock
The French luxury goods conglomerate has also flagged up issues with Chinese tourist spending. The Louis Vuitton owner said in October that officials in the totalitarian state had cracked down on travelers returning home with undeclared goods. Officials are said to be keen to encourage more local consumption, a move which would benefit the Chinese economy.
U.S.-listed shares sold off 4.1% and are more than 20% below a May high of 73.61. Its relative strength line has been choppy, and it remains adrift below its 50-day line.
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The post Before Apple Warned On China, These 5 Stocks Raised Red Flags appeared first on Investor's Business Daily.
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