Financial Services Talking Points | 30/01/2018

In today’s talking points: Starbucks sees potential for China to be most important segment after first quarter review; Turnbull Government to loan 3.8bn to finance Australia’s arms exports; TPP deal reached; China prepares for potential slowdown


Starbucks sees potential for China to be most important segment after first quarter review

While Starbucks’ performance for the first quarter of 2018 had been worse than expected, Starbucks CEO Kevin Johnson remains positive about operations in China following a 6% increase in sales. Johnson cites strong GDP, digital investments, and food sales as the pillars to success in the company’s current second largest market. China’s strong middle class, which will be twice as large as the US’ by 2021, are increasingly ‘digitally connected’ and have strong demand for quality baked goods in addition to beverages. These should be meaningful factors, Johnson says, for comparable store growth in the long run.

Read more at: Yahoo Finance


Turnbull Government to loan 3.8bn to finance Australia’s arms exports

The Australian government released details of a 3.8bn loan scheme to assist Australian defence companies to boost shipping of weapons and other exports in to the US, UK and other arms importers. The scheme is said to help small and medium sized defence firms to compete globally and will aim to lift Australia from the 13th defence exporter to under the top 10 in the world. An Australian defence export office working alongside Austrade will also be created as part of the package.

Read more at: Business Insider


TPP deal reached

Agreement between 11 nations including Australia, Japan and Canada has seen the Trans-Pacific Partnership again revived after being plagued by a number of setbacks. The agreement aims to create commonality in laws between the nations and cut existing tariffs to make it cheaper and easier to export and invest. While the deal is unlikely to result in price drops for Australian consumers, government representatives have stated the deal is set to create jobs across a variety of affected sectors. Farmers look set to benefit the most with export regulations eased for products including beef, sugar, rice and dairy. Implementation of the deal is up to the government of each signatory nation, with some changes not to be seen for a further decade.

Read more at: ABC


China prepares for potential slowdown

The Chinese government is preparing for what it calls a series of ‘critical battles’ in the coming three years as it braces for an economic slowdown. Expansion is predicted to come in as low as 6.5%, the country’s lowest figures since 1990. After rapid expansion in past years, Xi Jinping has emphasised a focus on moderate future performance and stability in the face of financial fragility. Of key concern to the nation is an increasing debt to GDP ratio approaching 320%, which analysts see as unlikely to be resolved within the next three years.

Read more at: Sydney Morning Herald