Impact of tech war on tech industries so far
In January due to lead/lag, the final quarter of 2017 and the full year results for 2017 would be great, and would be announced only around Feb/Mar period. So many investors rushed in and the tech companies capitalized on the timing to issue bonus and whatever sweets that the investors love while insiders sell.
From the chart of AEM, Hi-P, Venture, etc you can see huge push up were done in the 1Q timeframe then, big volumes were sold starting with 2Q and now into July/August. (This distribution was by people in the know, insiders and BB).
I mentioned Tech stocks will see clearer impact in 2Q/3Q reportings especially if you follow the semiconductor productions and sales (See my write-up on the semiconductor cycle- starting from orders/chip productions/shipment to assemblers/and sales in Oct for Christmas session).
1Q reporting (in April/May) showed little impact as orders were still flowing in but by the end of the first quarter, tech companies suddenly saw smaller requirements for chips due to 2017 high production and inventories.
2Q/3Q will show the true colors of the impact and further aggravated by five factors:
1. Last year high inventories and increasing slower sales of mobile phones in 2nd half of 2017 and carried over to this year
2. The focus of Chinese mobile phone companies on upgrading to match Samsung and lowering prices (same or better features but at lower price) knocking the competitiveness out of Apple and Samsung.
3. The sudden ban on ZTE resulted in a shakeup of the electronic supply chain for a couple of weeks/months
4. The shakeup makes Chinese importers (the targets of US) realize that they have to be self reliant, resulting in the immediate pumping of not billions but hundreds of billions of USD into making their own chips. This aggravates the sales of Intel, Macron, etc.
5. The tech war is not helping. The tariff helps to raise prices, reduces productions, cuts sales to the world largest electronic consuming market from the US Electronic MNCs, and helps push China companies to make their own chips.This is BAD news as China when it becomes world number 1, will cut off American electronic companies from its market and companies in the supply chain for these American companies
If you observe my estimations for Venture, Hi-P, Sunningdale, AEM, etc you will see me a bear with lowered prices. This is due to prices trending down. I dun control the market nor can I influence the market, but the trend shows I was right.
What is going to happen in the next few months of 2018? Avoid Tech Stocks