Apple Sell-Off Has Bulls Wary About Taking on Tariff Risks

Its reputation as a haven stock is being overwhelmed by the current uncertainty

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A sharp sell-off in shares of Apple illustrates investor skepticism about its ability to navigate US President Donald Trump's tariffs on China, Vietnam and India - countries all critical to the iPhone maker's supply chain.

Its shares dropped 19 percent in the wake of last week's tariffs announcement, marking the worst three-day stretch for Apple since 2001. The rout erased more than US$637 billion (S$859 billion) in market value from the tech giant and sent a proxy for the stock's volatility skyrocketing. The stock fell another 1.1 percent on April 8, erasing an initial rebound.

"The tariff situation really complicates things for Apple. What is it going to do? Raise prices? That will hit demand. Absorb costs? That will hurt earnings and margins," said Mr. Anthony Saglimbene, chief market strategist at Ameriprise Financial Services. "It is very difficult to assess prospects from here, and that's why the market has reacted the way it has."

The risk became more acute with the threat on April 7 of another 50 percent tariff after China retaliated against previous tariffs with one of its own on US imports. The extra tariff has since been imposed.