ASIA MARKETS: Asian Markets Unfazed By U.S. Government Shutdown

By FeaturesDow Jones Newswires

Samsung, some other Apple suppliers drop on fears of low iPhoneX demand

Market reaction remained muted Monday in Asia after the partial shutdown of the U.S. federal government, with little movement in stocks and other asset classes.

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But Samsung Electronics (005930.SE) fell as fresh caution grew about demand for rival Apple's most expensive iPhone. While the South Korean company has its own line of smartphones, it is also a global manufacturer of components.

Samsung's next-generation displays feature organic light-emitting diodes, or OLED. Apple (AAPL) uses Samsung's technology for the iPhone X. But SK Kim, which tracks Samsung for Daiwa Securities, said there are some concerns Apple could stop using OLED screens due to quality issues.

That comes as iPhone X sales continue to be a worry. After channel checks with Apple vendors by Daiwa's Taiwan-based analyst Kylie Huang, Daiwa now expects first-quarter orders to be 20% to 30% below the broker's previous forecasts.

This "dovetails with our concern that the iPhone X's high price point could impact ongoing sell-through," Huang said. However, Kim said the stock-market reaction on Samsung "is overdone."

Samsung was recently down 2.6%. South Korea's Kospi was dragged down by electronics giant, falling 1.1%.

But the worries weren't widespread, with smartphone-lens companies Largan Precision (3008.TW) and Sunny Optical (2382.HK) as well as Apple product-assembler Hon Hai (2317.TW) little changed.

Stocks in Taiwan, home to a number of companies in Apple's supply chain, continued to rise with the Taiex hitting another 28-year high. It was recently up another 0.3%, helped by a 1.6% jump in Taiwan Semiconductor (2330.TW) , that market's biggest company. That stock rallied 7.8% last week amid strong fourth-quarter results.

Still, Apple audio supplier AAC Technologies (2018.HK) fell 2% in Hong Kong. Japan's Alps Electric (6770.TO) -- which makes sensors -- dropped similarly.

Meanwhile, stocks in other Asian markets were little swayed by the U.S. budget impasse, with the situation largely seen as "political brinkmanship with little economic impact," said Michael McCarthy, chief market strategist at CMC Markets.

The Wall Street Journal Dollar Index was recently down less than 0.1% while 10-year Treasury yields remained at 2.66% and S&P 500 futures were off 0.1%.

One market moving was New Zealand, where the NZX 50 closed up 0.5%. Equities there have notably underperformed this month, with the index entering today's trading down 1.3% amid broad gains elsewhere.

The benchmark, which rose every month last year, has been hit in January, partially by concerns about the country's currency value rebounding too much after 2017 declines. The New Zealand dollar recently hit multi-month highs against the U.S. dollar, leading to selling in some export-reliant companies.

But the currency gains have stalled in recent days, fueling gains for a2 Milk (ATM.NZ) , which rose another 3.5% Monday.

Elsewhere, smaller-cap Chinese stocks were rebounding sharply after fresh weakness early Monday. The startup-heavy ChiNext, which hit a six-month low soon after the open, finished morning trading up 2.5%.

Financials, which have been hot this month, pulled back as Pudong Development Bank was fined 462 million yuan ($72 million) for allegedly falsifying loan applications and covering up bad-debt levels.

(END) Dow Jones Newswires

January 21, 2018 23:43 ET (04:43 GMT)

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