CEO INSIGHTS – Week Ending 6 October 2017 By NAOS Asset Management

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"China is very much like the '60s and '70s in America, when it had a can-do attitude and there was a lot of money going into investments and they led the world in many industries" Kerr Neilson, CEO, Platinum Asset Management

As part of the NAOS investment process, we pay particular attention to the comments made by company CEO’s and business leaders in order to gain a greater understanding of the current investment environment and key trends that may be emerging. Below are quotes from the week which in our view detail some of the most important and prominent industry trends and economic factors impacting their businesses.

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Leisure & Tourism

“Australia maintains its position as the cruise market with the highest population penetration, with the equivalent of 5.3% of the Australian population taking a cruise” Report by Cruise Lines International Association

Airlines

"It is entirely reasonable to believe that in the next 10 years, we will see supersonic jets safely and sustainably flying commercial passengers" John Borghetti, CEO, Virgin Australia

China

“The market seems to be pretty solid in China. Housing’s coming off a little but it was pretty robust, so that is not a matter for concern. We also think that in terms of mining production in China, there’s been a lot more discipline in managing environmental issues and also taking off high-cost, low-quality production, which means we’ve benefited a ­little bit in terms of having quality production” Mark Cutifani, CEO, Anglo-American

“China is producing twice as many automobiles as the US and eight times as much steel, and it also dominates the world in terms of science, technology, engineering and mathematics graduates, with 4.7 million last year. That’s compared to 2.6 million for India and just over half a million each for the US and Russia” Kerr Neilson, CEO, Platinum Asset Management

Commodities

“Like China since the start of this century, India is in the midst of a huge wave of urbanization, the scale of which has few parallels in history” Report by Department of Industry, Innovation and Science

Trump tax cuts

[The chance of a tax cut is] “higher than most people think. Any politician that can’t pass a tax cut is probably in the wrong line of work” Warren Buffett, Chairman, Berkshire Hathaway

"Although these [Trump tax] reforms are initially budget neutral, the expansion of investment increases tax revenues over time, which reduces the deficit and the debt stock in source countries" Report by IMF

Domestic Economy

"There are reasons now to be hopeful that consumers will start to see their real wages growing in line with productivity again" Scott Morrison, Australian Treasurer

“When you talk about 5.7% unemployment, it is really that and then 9% underemployment. Some is people working two part-time jobs, neither of which are strong enough for them to ever get a bank loan” Gene Tilbrook, Deputy Chairman, Australian Institute of Company Directors

Electric Vehicles

"General Motors believes in an all-electric future. Although that future won't happen overnight, GM is committed to driving increased usage and acceptance of electric vehicles” Mark Reuss, Chief of Global Product Development, General Motors

Agriculture

"Australia is facing a challenging year in terms of exports because production is going to be down significantly and the opportunity is for the Black Sea to fill that gap. And we have priced ourselves out of the market. A certain amount of inelastic demand will come back to Australia, but the Black Sea is going to continue to take market share from Australia. That is a fact " Andrew Young, Executive Director, Plum Grove 

"Indonesia is growing at 5 per cent a year in flour consumption and our increase in wheat production is growing at 1 per cent to 2 per cent. Clearly as that gap continues to get wider, origins like Ukraine and Russia, which are still growing production, will fill demand” Jason Craig, General Manager of Marketing & Trading, CBH Group

Retail

“The vast majority of [online] purchases are made on page 1 and then page 2” David Taylor, CEO, Procter & Gamble

“Whether it’s talk of Amazon entering the market or the high levels of household debt affecting consumer spending, it’s clear many retailers are down in confidence and the upcoming Christmas period is doing little to lift spirits” Simon Bligh, CEO, Dun & Bradstreet

Branding

“If I went to Costco with a bunch of small brands you're not going to get in. What they want to have is the leading brand and a retailer brand, and that's true of many limited selection formats across the world” David Taylor, CEO, Procter & Gamble

Commercial Property

“Attracting a quality food and beverage offer continues to be a major strategy for shopping centres, particularly food catering/dining precincts” Report by JLL

Renewables

“There’s no doubt the country will have to move to renewables and cleaner fuels, but there’s also no doubt coal plays a part” Mark Cutifani, CEO, Anglo-American

Construction

“Asia Pacific is the largest region in terms of paint and coatings demand, representing roughly 45% of global coatings demand…[And] not surprisingly Asia Pacific is forecasted to grow at a rate well in excess of the rest of the world” Robert Wells, Senior VP, Corporate Communications & Public Affairs, Sherwin-Williams

“Australia and New Zealand are fairly mature markets. Housing is strong coming off recent highs, but holding at good levels. Remodelling is strong, and we're seeing reinvestment from capital growth” Aaron Erter, President of the Consumer Brands Group, Sherwin-Williams

Beverages

“We are stepping up marketing spending on Pepsi and Mountain Dew, including our zero and low-calorie products” Indra Nooyi, CEO, PepsiCo

 

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Important information: 

This material has been prepared by NAOS Asset Management Limited (ABN 23 107 624 126, AFSL 273529) (NAOS) for general information purposes only and must not be construed as investment advice. Certain economic, market or company information contained in this material may have been obtained from published sources prepared by third parties. Nothing contained herein should be construed as granting by implication or otherwise, any license or right to use such third party content without the written permission of the owner.

  

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