China’s consumers are changing because of the trade war and food-driven inflation, says China expert Victor Shih at the Investor Place. They will pick pork over iPhones, he says, with a drastic impact on the stock markets.
The Investor Place:
In an email correspondence, Victor Shih, Ph.D., associate professor of political economy at the University of California, San Diego, wrote:
“Both the trade war and food-driven inflation likely will crimp Chinese consumers’ discretionary spending. While the trade war has slowed employment growth and wage growth, the African swine flu has driven up food prices substantially. For the average households, they are trapped between much higher food prices and uncertainties about future income. This will limit their spending on discretionary items.”
Put another way, AAPL stock may be on a winning path right now. But that’s not guaranteed to sustain. As known pressures tighten their stranglehold, the impact will invariably filter down…
But at the present juncture, China is a major risk factor. As Professor Shih noted, the average Chinese consumer is feeling the heat. Given the choice of buying food to live or buying an iPhone 11, I don’t have to spell out the correct answer. Therefore, anybody who is not a day trader should probably avoid or cash out of AAPL stock.
Are you looking for more experts on managing your China risk? Do check out this list.