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The Huawei ban and Abercrombie & Fitch

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Huawei ban

Huawei has warned that the US ban in dealing with them is going to hurt around 1,200 US suppliers who use their technology.

The total ban on dealing with Huawei will come into force in the middle of August in order to give US companies time to re-jig their supply chains.

China is trying to fight back, however, announcing tax breaks last week to support the tech industry and it has also threatened to restrict the supply of rare earths in retaliation. Rare earth metals are used in cancer treatment drugs, smartphones and renewable energy tech and China controls the vast majority of the world’s supply.

The thing is that rare metals aren’t actually all that rare – it’s just that the process to extract them is expensive and damaging to the environment. Still, it IS a fightback and global markets fell in response.

In a way, this trade war might actually benefit both the Americans AND the Chinese long-term as the Americans will be able to protect their intellectual property and China will become more self-sufficient.

In the meantime, companies like Nokia and Ericsson are fighting over the contracts to replace all the Chinese gear. 5G is definitely looking like it’ll help both companies to get back in the game!

Abercrombie & Fitch

The other thing I wanted to highlight today was disappointment in preppy apparel retailer Abercrombie & Fitch.

Investor excitement had been gathering about a turnaround in fortunes for the company until it announced weaker sales and a downbeat outlook yesterday.

Its shares fell by a chunky 26% in response to the news and it just goes to show how difficult this sector of retail is at the moment with the likes of Kohl’s, JC Penney and Nordstrom all showing weaker trends.

The company blamed lower footfall in malls and announced that it would be closing flagship stores in New York, Milan and Japan – but the costs involved in doing that will hit second quarter results.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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