Notes from the Field: Spring 2019 | Capital Group

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Notes from the Field: Spring 2019

Observations from Capital Group Analysts Around the World.


Artificial intelligence can gauge a customer’s tone of voice.

Beyond recognizing spoken words, artificial-intelligence systems are increasingly able to detect emotional sentiment on automated phone calls. Newer systems can interpret vocal inflections to sense, for example, if a customer is confused or frustrated when activating a new credit card or cellphone. Among other benefits, these systems eventually will allow companies to do away with end-of-call surveys, which can annoy customers.
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Labor pressures favor well-run restaurant chains.

Full-service restaurants are experiencing solid sales growth, but the strong labor market is making it difficult to hire and retain high-quality employees. That’s creating wage pressures that could weigh on profit margins this year. Over the long run, this dynamic could provide a boost for well-run chains with the resources to spend on technology and store upgrades. Restaurants that make such investments can improve customer satisfaction and gain market share over time.
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Vietnam offers compelling opportunities.

Though smaller and less economically developed than some of its Southeast Asian neighbors, Vietnam is being driven by a youthful and optimistic population. More than half of its citizens are under the age of 35, with broad technological proficiency, an affinity for consumer spending and low household debt. Of course, the developing nature of the country and its corporate culture require extensive due diligence of promising companies, such as banks and retail stores.
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Young consumers should boost the industrial sector.

A rise in the number of Americans between 35 and 44 years old should help the industrial sector, which encompasses a broad grouping of companies that make everything from factory automation equipment to home security systems. After a nearly two-decade decline, the number of people aged 35 to 44 is projected to rise from 40 million today to 50 million in the next 10 years. This age group has historically been known for major purchases such as homes, cars and related products.
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Ride-sharing is growing around the U.S.

The U.S. ride-sharing industry is expected to expand by 20% or more in each of the next three years, as the potential market for these services is enormous. That should translate to strong revenue growth for ride-sharing companies. However, the long-term profitability of major providers remains a question mark as they confront ongoing challenges, such as insurance costs, driver retention and the unproven nature of the business model itself.