Apple’s Ensemble Act Is Working Again

It’s as good a time as any to talk about Apple Inc. without the iPhone.

No, the iconic smartphone isn’t going anywhere. In fact, Apple just reported Tuesday afternoon that iPhone revenue totaled $39.6 billion for its fiscal third quarter ended June 26, up 50% from the same period last year. That represents the best growth the iPhone has seen in six years for what is typically its weakest seasonal quarter, as many buyers begin waiting to make purchases ahead of new devices that typically debut in the early fall.

Wall Street expects Apple to close its fiscal year in September with record iPhone revenue of nearly $187 billion, which would make its phone segment alone the 10th largest business on the S&P 500. But a funny thing has happened over the past few years: The iPhone has also become a notably smaller part of Apple’s business. At the smartphone’s last sales peak in fiscal 2018, the iPhone represented 62% of the company’s total revenue. For the trailing 12-month period ended in June, that number was 52%.

For that performance, Apple can thank its supporting cast across the board. Sales of iPads, Macs and wearables like the Apple Watch and AirPods have boomed over the past three quarters, while service revenue growth also picked up. Macs and iPads were definitely helped by the work-from-home trend sparked by the pandemic, but Apple also made some timely and notable updates to both lineups—including new in-house chips for several of its Mac models. Combined Mac sales for the last three quarters have totalled $26 billion—up 33% from the same period last year.

That’s a helpful trend for Apple as it heads into what will likely be a much more subdued sales cycle for the iPhone. Last year’s iPhone 12 models, which featured a new design and 5G connectivity for the first time, sparked a major upgrade push. Analysts estimate that Apple sold 186 million iPhone units for the nine-month period ended June, up 26% from the same period last year, according to consensus estimates from Visible Alpha. But Apple typically follows major upgrades with minor ones. Analysts expect iPhone unit sales to be flat in Apple’s 2022 fiscal year following a 22% surge for the current one.

The big question is whether the supporting acts can keep stepping up. The remote-work boost from the pandemic is already fading, as evidenced by a notable slowdown in PC sales during the second quarter, as reported by market-tracking firms IDC and Gartner. Apple is also still contending with the chip shortage. Chief Financial Officer Luca Maestri said on Tuesday’s conference call that the company expects supply constraints to worsen in the September quarter relative to June, mostly affecting the iPhone and iPad.

Still, Mr. Maestri projected the company will deliver “very strong double-digit” revenue growth for its fiscal fourth quarter. With a market value of nearly $2.5 trillion and a stock still at a relatively high multiple of about 28 times forward earnings, Apple can’t afford to have any of its businesses start phoning it in.

China’s securities regulator is ramping up support for the country’s embattled equities markets, announcing measures to funnel capital into Chinese stocks.

The aim: to draw in more medium to long-term investment from major funds and insurers and steady the equities market.

The latest round of policy boosts comes as Chinese stocks start the year on a soft note, with investors reluctant to add exposure to the market amid lingering economic woes at home and worries about potential tariffs by U.S. President Trump. Sharply higher tariffs on Chinese exports would threaten what has been one of the sole bright spots for the economy over the past year.

Thursday’s announcement builds on a raft of support from regulators and the central bank, as officials vow to get the economy back on track and markets humming again.

State-owned insurers and mutual funds are expected to play a pivotal role in the process of stabilizing the stock market, financial regulators led by the China Securities Regulatory Commission and the Ministry of Finance said at a press briefing.

Insurers will be encouraged to invest 30% of their annual premiums earning from new policies into China’s A-shares market, said Xiao Yuanqi, vice minister at the National Financial Regulatory Administration.

At least 100 billion yuan, equivalent to $13.75 billion, of insurance funds will be invested in stocks in a pilot program in the first six months of the year, the regulators said. Half of that amount is due to be approved before the Lunar New Year holiday starting next week.

China’s central bank chimed in with some support for the stock market too, saying at the press conference that it will continue to lower requirements for companies to get loans for stock buybacks. It will also increase the scale of liquidity tools to support stock buyback “at the proper time.”

That comes after People’s Bank of China in October announced a program aiming to inject around 800 billion yuan into the stock market, including a relending program for financial firms to borrow from the PBOC to acquire shares.

Thursday’s news helped buoy benchmark indexes in mainland China, with insurance stocks leading the gains. The Shanghai Composite Index was up 1.0% at the midday break, extending opening gains. Among insurers, Ping An Insurance advanced 3.1% and China Pacific Insurance added 3.0%.

Kai Wang, Asia equity market strategist at Morningstar, thinks the latest moves could encourage investment in some of China’s bigger listed companies.

“Funds could end up increasing positions towards less volatile, larger domestic companies. This could end up benefiting some of the large-cap names we cover such as [Kweichow] Moutai or high-dividend stocks,” Wang said.

Shares in Moutai, China’s most valuable liquor brand, were last trading flat.

The moves build on past efforts to inject more liquidity into the market and encourage investment flows.

Earlier this month, the country’s securities regulator said it will work with PBOC to enhance the effectiveness of monetary policy tools and strengthen market-stabilization mechanisms. That followed a slew of other measures introduced last year, including the relaxation of investment restrictions to draw in more foreign participation in the A-share market.

So far, the measures have had some positive effects on equities, but analysts say more stimulus is needed to revive investor confidence in the economy.

Prior enthusiasm for support measures has hardly been enduring, with confidence easily shaken by weak economic data or disappointment over a lack of details on stimulus pledges. It remains to be seen how long the latest market cheer will last.

Mainland markets will be closed for the Lunar New Year holiday from Jan. 28 to Feb. 4.

Apple’s Ensemble Act Is Working Again

Tech giant’s iPhone dependence has shrunk, as iPad, Mac, Wearables and Services all pick up growth.

The latest round of policy boosts comes as stocks start the year on a soft note