Jan 24, 2019

1. The trade war didn't kill U.S. companies with Chinese exposure

Illustration: Sarah Grillo/Axios

U.S. companies with significant exposure to China have seen their stocks tumble since President Trump's opening salvo in the trade war. But it wasn't really China or the oft-invoked trade tensions that hurt those companies.

The big picture: Chipmakers like Skyworks, Qorvo, Qualcomm and Micron, along with Wynn Resorts, top the list of S&P 500 companies that make their biggest share of revenue in China, according to data compiled by Goldman Sachs. All of those stocks are deeply in the red since Trump took the first steps toward a full-blown trade war on Jan. 22.

  • Yes, but: An Axios analysis shows shareholders weren't punishing these companies because of their exposure to China. Fourteen of the top 20 companies most exposed to China are semiconductors — an industry that suffered during this period, thanks to a sector-wide slowdown. Those stocks fared no worse than an exchange-traded fund tracking the industry, which fell 14%.
  • Semiconductors were bound to suffer, regardless of a trade war, thanks to slowing demand for memory chips, rising inventory levels and falling prices, Sebastian Hou, an analyst at CLSA, told CNBC last year.

More consumer-focused companies like Nike (which nets 12% of of its revenue from Greater China) saw their stock prices increase, in line with the consumer discretionary sector which outperformed the broader market.

Rather than a broad-based China slowdown, data shows individual companies saw largely individual results.

  • Shares of Advanced Micro Devices (AMD), which generates about 30% of its sales in China, jumped almost 60% since last year — bucking the downtrend of its semiconductor counterparts. Analysts say the rise is largely due to the possibility that AMD was taking market share from longtime players like Intel.
  • Qualcomm's stock suffered after its merger with Broadcom was killed by the Trump administration, showing its "aggressive stance on perceived threats from foreign investors and the growing technological might of China," as Axios reported last year.
  • Wynn Resorts significantly underperformed other consumer discretionary stocks. But its shares took a major hit earlier last year after longtime CEO Steve Wynn resigned following sexual misconduct allegations.

What they're saying: Count executives at Texas Instruments — which gets 44% of its revenue from Greater China — among those who say the trade war isn't to blame for their struggles.

  • After the company missed third quarter estimates, CFO Rafael Lizardi said the lackluster results were "mostly driven by a slowdown in semiconductors" and smartphone sales, not a macro-driven event, like trade. (Texas Instruments did better in its most recent quarter.)

The bottom line: Companies with big exposure to China can point to a wide range of issues, not necessarily the trade war, for the pain in their stocks.

Go deeper

What top CEOs fear telling America about the coronavirus shutdown

Illustration: Eniola Odetunde/Axios

Top CEOs, in private conversations and pleas to President Trump, are warning of economic catastrophe if America doesn't begin planning for a phased return to work as soon as May, corporate leaders tell Axios.

Why it matters: The CEOs say massive numbers of companies, big and small, could go under if business and government don't start urgent talks about ways groups of workers can return.

Health care workers vs. the coronavirus

Photo Illustration: Sarah Grillo/Axios. Photos: ANGELA WEISS/AFP via Getty Images, Bruce Bennett/Getty Images, and Europa Press News/Europa Press via Getty Images

Health care workers are at an especially high risk of catching the coronavirus, because of their prolonged exposure to patients who have it. Making matters worse, the U.S. doesn't have enough of the protective equipment, like masks and gloves, that keeps them safe.

And yet these workers, with loved ones of their own, keep showing up at hospitals across the country, knowing that more Americans than they can possibly care for are depending on them.

Go deeperArrow2 hours ago - Health

Coronavirus crisis tests Trump’s love for cheap oil

Illustration: Eniola Odetunde/Axios

President Trump is working to help an oil industry imploding as the coronavirus crisis chokes demand, but listen closely and you’ll hear his enduring love for cheap prices.

Why it matters: He’s like most Americans, who worry about energy only when it’s expensive or gone. As president, Trump has been slow and uneven in responding to the sector’s turmoil because of his inclination to cheer rock-bottom prices.