15 Unexpected Reasons to read Global Sector Reports on St Valentine’s Day

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​Flowers that bloom for 24 hours.  Chocolate hearts sold and consumed by the kilo. Love packaged and marketed en-masse.
Let us be honest. St Valentine’s Day is magic in a neatly wrapped box. It’s an industry and a massive one for that matter. For retailers and chauffeurs and rose growers worldwide, it is a day to celebrate revenues or bemoan declining margins.
As it happens it is also the day where we serve a fresh batch of our Global Sector Reports. Think of it as a bouquet of sorts.
Yes, it’s our way of courting you.
We could tell you these brief short-term overviews of the global market offer a strengths and weaknesses analysis, the sector’s current risk level, a ‘what to watch’ list, and insights for leading export-import markets. We could boast the new digital interactive map we developed for each of the 15 sectors.
Or we could test a hypothesis: our Global Sector Reports are as fun as a medieval courtly chivalry turned into a feast of shopping for champagne and bonbons. Here are the 15 almost-reasonable arguments.
1.      Retail: King size mattresses and bottles of brut under the same roof
The boundary between Grocery - Food and Beverages, Home appliances - and Non-grocery retailers  - furniture, sporting goods, office supply, etc., has become increasingly blurred.
2.       Textile: Keep an eye these Amazons and Ali-Babas
Choosing the right distribution channel is key as fast fashion and e-habits are rising exponentially
3.       Agrifood: Honey, please don’t pass the sugar
A series of deregulation policies to support trade continues with the termination of production and export quotas of sugar in the European Union
4.       Household equipment: Take me south
Producers should take note of new market opportunities thanks to a growing middle class in emerging markets
5.       Information and Communication Technology: Look! A unicorn!
Frequent mergers & acquisitions of unicorn companies - startups valued at more than a billion dollars – are weakening medium-sized companies. Moreover, the current phase of digitalization could increase the risk of an IT services bubble.
6.       Pharmaceuticals: A&M as short-term aphrodisiac
The hectic mergers and acquisitions activity aimed at bolstering company pipelines is a problematic alternative to investment in Research and Developments. At the same time, competition from generic and biosimilar drugs eating away at patented drugs’ market shares.
7.       Energy: Remember the good oil’ times?
Oil prices are up, finally. But OPEC’s ability to enforce oil output cuts agreement will be put to the test in the first half of 2017.
8.       Chemicals: How deep is your price
Changes in fossil fuels’ price are impacting both feedstock costs and final product prices. Overcapacities in some industrial sectors worldwide sharpened due to China’s readjustment, lower demand, and reduced global output.
9.       Paper: Gimme a gift and forget the cards
Globally, the wrapping paper sub-sector is performing better than printing and writing papers sub-sectors. Industry watchers note that European pulp buyers are squeezed by input costs denominated in weak euros. U.S. papermakers are overcoming the stronger dollar through lower feedstock prices.
10.   Machinery and Equipment: The Donald and Janet story
Reflation and Fed rate hikes are bound to increase input and financing costs. This could result in further cash flows deterioration if revenue growth is insufficient.
11.   Metal: Ore my! You luck much better
This is a sector in recovery but overcapacity is still a major issue. China, which accounts for 50% of global steel demand and production, is critical to this process.
12.   Construction: You rate me up before you go-go
The return to structural growth could be shaped by increasing interest rates. A notable rebound in the residential market in advanced countries while the construction sector is on a downturn in emerging countries
13.   Aeronautics: Up and down in the air
While backlogs are immense and new models are rolled out, sales by Boeing and Airbus were somewhat down in 2016. Add to that challenges to supply chains on the back of high production and demands for more R&D into fuel efficiency and you get a mixed picture.
14.   Auto: Green is the new gold?
Investment in R&D is crucial for emissions’ reduction technology and autonomous vehicles. While a lack of geographical diversification puts turnovers and margins at risk, the development of premium offers (brands) is a key to rising profits.
15.   Transportation: OMG this cruise just got so expensive
The sector is gearing up for a rise in oil prices. Travelers by sea, air, and land will pay the price.
Ludovic Subran
Chief Economist
Euler Hermes
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