Disputed report of China government iPhone ban highlights Apple’s geopolitical risk

While China has denied reports of a government iPhone ban, Apple  (AAPL) – Get Free Report investors are still concerned this policy could become a reality as geopolitical tensions rise. Despite refuting reports, Ministry of Foreign Affairs spokesperson Mao Ning said China has noticed “many media reports on the security incidents of Apple’s iPhone,” and that the country “attaches great importance to information and cyber security.”

The initial report sent shares of Apple plunging, with the stock suffering its largest daily loss in a month. Eddie Ghabour, Co-founder & CEO, Key Advisors Wealth Management joined TheStreet’s J.D. Durkin to discuss what this potential government iPhone ban could mean for Apple investors.

Full Video Transcript Below:

J.D. DURKIN: So, of course, I want to start with these recent reports that China is moving to ban iPhones and iPhone usage for government officials, various estimates. Eddie, as you know about how many devices this would ultimately actually impact. What do you make of those headlines in the last week? And is this a cause for concern if you were, let’s say, an Apple investor?

EDDIE GHABOUR: Look, I think it is a reason for concern. And I think this is why you’re starting to see some of these tech companies start to move to India. We’re actually very bullish on India. But in regards to this news with China, it shows how vulnerable we are, right? Because at the snap of a finger, the government can just lay down the rule law and everyone’s going to abide by it. So there’s definitely some risks there for these multinational companies that do business in China.

And look, from a geopolitical perspective, we know tensions with China have been getting tougher and tougher this year. And this is another warning sign that it’s something that we’ve got to keep a close eye on because this could escalate into other things that would not be very good for the market and certainly a major headwind potentially. So it is a big deal in my opinion.

J.D. DURKIN: I mean, how retaliatory of a nature do you see this being? I mean, here in the United States, we’ve got, you know, congressional bans, government device bans on things like TikTok, then Huawei is part of the conversation there as well. Is this just sort of a tit for tat that may continue to escalate?

EDDIE GHABOUR: I think it could. And look, you know, they’re developing a phone over there that they want it to compete with Apple. So it’s one of those things where they’re trying to — the more market share they can get and potentially hurt a U.S. company, too, then puts them in a position of strength. So think long term, this is going to bite China in the rear end and it’s going to make them weaker and make other countries like India stronger.

But at the end of the day, in the short term, you can’t just take make a transition from things being manufactured and all the business that comes from China and transition it overnight to a country like India. So in the near term, I think this could certainly escalate. So it certainly has our attention. You don’t want to make a major move on a stock just because of this one headline. But again, it’s something that is I’ll call it a warning sign that investors need to keep an eye on.

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