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Global markets are looking ahead to the US Fed's meeting scheduled for Thursday, November 7, 2024, expecting the Jerome Powell-chaired FOMC (Federal Open Market Committee) to slash interest rates further by 0.25%. In September this year, the Fed surprised the markets by cutting interest rates by a massive 0.5%, for the first time in 4 years. <br /><br />As per the <keyword id="23807624" type="General" weightage="20" keywordseo="CME-Fed-Watch-Tool" source="keywords">CME Fed Watch Tool</keyword>, there is now a 99.5% chance that the Fed will reduce the interest rates by around 25 basis points, bringing it within the range of 4.5% to 4.75%. Only 0.5% believe that the Fed might leave the rates unchanged, within their present range of 4.75% to 5%.<br /><br />As for the Fed's December meeting, scheduled for December 18, per the CME Fed Watch tool, 79.5% believe that interest rates would be in the range of 4.25% to 4.5%. Another 20.4% believe that yields will remain in the range of 4.5% and 4.75%. Only 0.1% see the interest rates staying within their current range of 4.75% to 5% <br /><br /><h2>No major changes anticipated</h2>However, it is unlikely that this quarter-point rate cut would bring about any significant financial changes in the US economy. The Fed is again expected to bring down the interest rates by another 25 basis points in their December meeting. This would imply a total rate cut of about 50 basis points by the end of this year. <br /><br />So, why is the Fed not bringing down interest rates by 50 basis points in one fell swoop this time around? Why wait till December to bring down the rates by another 25 basis points? Experts believe that it could stoke inflation, which has seen a sharp decline in the recent past. A steep slash of borrowing rates could accelerate borrowing activity and inject significant cash into the economy at once, pushing up inflation. Per the Fed's recent projections, a total of 4 rate cuts are anticipated in 2025. <br /><br />On a YoY basis, inflation in the US dipped to 2.4%, close to the Fed's target of 2%. With inflationary pressures reined in, the economy growing at the rate of 2.8% during the third quarter of FY24, and the unemployment rate down to 4.1%, the markets see much merit in bringing interest rates down.<br /><br /> This is especially important to boost spending, particularly in sectors such as housing and automobiles, where even a slight tinkering in interest rates can drastically impact the amount and volume of loans taken to own them. <br /><br />Data suggests that during Trump's presidency tenure, i.e., between 2017 and 2021, inflation averaged at a rate of 1.9% a year. During the Biden administration, where Kamala Harris served as VP, the inflation is on track to average around 5% a year.<br /><br />Shrisha Acharya, Vice President, Anand Rathi Global Finance, also notes that the results of the impending US elections, which are likely to be declared tomorrow, will impact the yields and stock markets. <br /><br />"The Trump card, coupled with potential Republican control, could mean higher bond yields due to anticipated increases in deficit spending, inflation risks, and potential tax cuts. This could very well jiggle the confidence in U.S. Treasury bonds and thus start a chain effect that will possibly impact global market stability and lead to short-term volatility. On the other hand, Harris’ rise has been met with a stock market rally glued on expectations of economic stability and controlled inflation, with more predictable fiscal policy likely to help in a soft landing," he explains.<br />

What can you expect from the US Fed meeting later this week? Here's all you need to know

<ul><li>The <keyword id="8194701" type="General" weightage="20" keywordseo="refurbished-smartphone" source="Orion">refurbished smartphone</keyword> market has recorded rapid growth in India.</li><li>While the unorganised sellers dominate the market, the organised sellers are also growing.</li><li>Affordability and shorter upgrade cycles are among the factors fueling the refurbished smartphone market.</li></ul> India's refurbished smartphone market is experiencing significant growth, outpacing the new smartphone sector. This reflects a maturing market which is increasingly catering to consumers looking for affordable yet reliable options.<br /><br />According to a report by Counterpoint Research, unorganised sellers dominate the refurbished smartphone market, accounting for 77% of transactions.<br /><br />The Indian refurbished smartphone sector has traditionally been dominated by unorganised players, offering devices at a fraction of the cost of the new models. However, the introduction of value-added services like warranties, quality assurance, and after-sales support by emerging e-commerce platforms is beginning to formalise this market, enhancing consumer trust and driving further growth.<br /><br /><h2>What’s fueling the refurbished smartphone market</h2><h3>Affordability</h3><keyword id="2698558" type="General" weightage="20" keywordseo="refurbished-smartphones" source="Orion">Refurbished smartphones</keyword> offer consumers access to higher-end hardware at lower costs, making premium technology more accessible to a broader audience. This aspect is particularly appealing in a price-sensitive market like India.<br /><br /><h3>Shorter upgrade cycles</h3>With technology evolving rapidly, many users prefer to upgrade their phones more frequently. Refurbished devices provide an avenue for this without the high cost associated with new purchases.<br /><br /><h3>Environmental impact</h3>There's a growing awareness of the environmental benefits of using refurbished products, which reduces electronic waste and the demand for new manufacturing, which is resource-intensive.<br /><br /><h3>Consumer confidence</h3>The entry of organised players who provide guarantees and quality checks on refurbished devices has significantly boosted consumer confidence. These services add a layer of reliability to what was once a market fraught with uncertainty about product condition and longevity.<br /><br />Despite the growth in the unorganised sector, there's a noticeable trend towards formalisation. E-commerce platforms specialising in refurbished goods are expanding, providing consumers with the convenience of online shopping backed by credible service commitments.<br /><br />The report also notes that this growth is not just contained within India. Globally, the refurbished smartphone market is on an upward trajectory, with similar trends observed in markets like Latin America, suggesting a broader international shift towards sustainable consumption in electronics.<br /><br /><strong>SEE ALSO:<br /><br /><a href="https://www.businessinsider.in/tech/mobile/news/moto-g35-5g-with-120hz-5000mah-battery-launched-at-9999/articleshow/116172283.cms">Moto G35 5G with 120Hz display, 5,000mAh battery launched at ₹9,999</a><br /><br /><a href="https://www.businessinsider.in/tech/mobile/news/redmi-note-14-pro-and-redmi-note-14-pro-launched-in-india-starting-at-24999/articleshow/116134415.cms">Redmi Note 14 Pro and Redmi Note 14 Pro+ launched in India starting at ₹24,999</a><br /><br /></strong><a href="https://www.businessinsider.in/tech/mobile/news/vivo-x200-and-x200-pro-camera-centric-to-launch-in-india-on-december-12/articleshow/115930004.cms"><strong>Vivo X200 and X200 Pro camera-centric smartphones to launch in India on December 12</strong></a><br />

India's refurbished smartphone market witnesses accelerated growth

In early Wednesday trading, the Indian rupee slid 14 paise to hit an all-time low of 84.23 per US dollar, weighed down by continued outflows of foreign funds and a robust US dollar in global markets. Forex analysts highlighted the volatility stemming from the ongoing US elections, suggesting that stability could return once results are clear in this close race.<br /><br />The US Federal Reserve is also on the radar, with an anticipated interest rate cut this week and a projected easing of up to 100 basis points by 2025.<br /><br />At the interbank forex market, the rupee opened at its historic low of 84.23 against the dollar, down from its previous close of 84.09. On Tuesday, the currency had ended slightly stronger, gaining 2 paise.<br /><br />Meanwhile, the dollar index, which tracks the strength of the US dollar against six major currencies, climbed 1.64% to 105.11. According to Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors, the index rose following initial election results showing former President Trump ahead, with the Republican party also leading in both the Senate and the House of Representatives.<br /><br />The global oil market saw movement as Brent crude prices dipped 0.98%, trading at USD 74.79 per barrel.<br /><br />Bhansali noted that the rupee’s trajectory will heavily depend on the Reserve Bank of India’s (RBI) response, particularly as the currency fluctuates with real-time election outcomes. He estimated an intra-day trading range between 84.00 and 84.35.<br /><br />On the domestic front, Indian stock markets showed positive trends. The Sensex climbed by 390.93 points (0.49%) to reach 79,867.56, while the Nifty rose by 135.60 points (0.56%) to 24,348.90.<br /><br />Despite these gains, foreign institutional investors (FIIs) were net sellers on Tuesday, pulling out Rs 2,569.41 crore from the capital markets, as per stock exchange data. This withdrawal underscores the challenges facing the Indian currency amid global financial uncertainties.<br /><br /><strong>(with PTI inputs)<br /></strong><br />

Rupee hits record low of 84.23 against US dollar amidst US elections 2024

India could see a shift in foreign direct investment (FDI) trends in the second term of Donald Trump (Trump 2.0) as President of the United States, says a research report by the State Bank of India.<br /><br />The report highlighted that under his first term, Trump 1.0, the Trump administration made sweeping regulatory changes aimed at attracting investments back to the U.S., which impacted FDI inflows globally, including India.<br /><br />It added that if similar policies are reintroduced in Trump 2.0 also, it could create challenges for emerging markets like India, which rely on FDI as a significant driver of economic growth. Notably, a recent Kotak report highlighted that a complete Republican control over all arms of the US government would mean increased US earnings via corporate tax cuts, higher tariffs on imports into the US and greater US fiscal deficits. <br /><br />The first two could spell doom for emerging markets like India and China, since foreign investors will make a beeline for investing more money in the  US markets, which will come at the cost of intense selloff in emerging markets. <br /><br />However, higher fiscal deficits will eventually lead to the dollar weakening after the initial euphoria dies down. <br /><br />"India may see shifts in foreign direct investments (FDIs) during Trump 2.0. The Trump 1.0 administration saw significant regulatory changes aimed at attracting investments back to the US," the SBI report stated.<br /><br />However, given that India has been gradually diversifying its sources of FDI (foreign direct investments), this trend could serve as a buffer against any potential decline. Moreover, domestic institutional investors have been stepping up big time, maintaining some balance to the massive exodus of FIIs over the past month. So far in November 2024, FIIs have withdrawn Rs 19,849 crores from the cash segment in Indian markets, while DIIs have poured in Rs  14,014.18 crores as of November 10th, 2024. <br /><br />"India is no longer dependent on the traditional sources of FDI inflows... unlike the recent past, FDI is now coming in many new sectors," noted the SBI report. <br /><br />Unlike a decade ago, when most FDI inflows came from a limited number of traditional sectors, India is now attracting investment in a wide array of industries, including renewable energy, sea transport, medical devices, and surgical appliances. Data suggests over the last 24 years, i.e., between April 2000 and June 2024, FDIs have poured in $1,013.4 billion in the Indian economy. Out of this, 67%, i.e., $689.88 billion, has come in just the last 10 years. <br /><br />The report added there are up to 12 emerging sectors showing strong FDI interest, which could help offset any loss of inflows in conventional sectors if there is a shift in global investment patterns under another Trump administration. In the last financial year, the top 5 sectors that have received the highest quantum of FDI inflow include the services sector (finance, banking, insurance, and business) which makes up about 16% of the inflows. This is followed computer software &amp; hardware, which constitute around 15% of total FDI flows. Trading and telecommunications follows with a share of 6% each, and Automobile Industry comes next with a 5% share.<br /><br />In the short term, the potential for increased U.S. tariffs, more restrictive H-1B visa policies, and a stronger dollar could bring some volatility to India's trade and investment landscape. However, in the long term, these challenges might also encourage India to expand its manufacturing capabilities, diversify export markets, and focus on becoming economically more self-reliant.<br /><br />Notably, India has maintained a merchandise trade surplus with the U.S. despite tariffs imposed during Trump's first term. This indicates that Indian exports have remained resilient, and there is potential to strengthen this trade relationship further by capitalizing on emerging sectors and reducing dependency on traditional industries.<br /><br />Suman Chowdhury, Executive Director &amp; Chief Economist, Acuité Ratings &amp; Research Limited cautions that in the medium to long term, the trade relationship with the US may see a structural improvement. "Higher tariff and trade restrictions in the US with China should translate into better opportunities for exports of manufactured goods from India", he adds. <br /><br />

FDIs may shift to US under Trump 2.0 but it is unlikely to severely impact FDIs inflow to India, says SBI Report

<ul class="summary-list"><li>Donald Trump's presidential-election victory has fueled major moves in financial markets.</li><li>Investors are anticipating tax cuts and looser regulation from the president-elect.</li></ul><p>Donald Trump's election victory immediately sent financial markets into a frenzy.</p><p><a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/trump-election-win-stock-market-today-record-high-sp500-dow-2024-11">Stocks soared to records</a> on the prospect of tax cuts and looser regulation. <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/bank-stocks-donald-trump-victory-reelection-wall-street-outlook-regulation-2024-11">Bank stocks</a> in particular got a lift amid speculation of increased deal activity.</p><p><a target="_blank" class="" href="https://markets.businessinsider.com/rates/u-s--rates-10-years">Bond yields</a> also surged as investors priced in the expectation that Trump's protectionist trade policies will be inflationary, complicating plans for further rate cuts. The dollar rose and gold dipped.</p><p>Cryptos of all sorts charged higher, with bitcoin setting a series of <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/bitcoin-price-today-btc-90000-donald-trump-election-crypto-policies-2024-11">records above $90,000</a> as traders looked ahead to lighter regulation from the self-appointed "<a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/trump-bitcoin-cryptocurrency-election-outlook-crypto-funding-regulation-biden-novogratz-2024-7">crypto president</a>."</p><p>A group of Bank of America analysts led by Michael Hartnett, the chief investment strategist of BofA Global Research, took stock of the recent moves.</p><p>Below are six charts that show just how extreme market fluctuations have been across assets:</p><h2 id="aa272ef7-0f9f-4856-aa0b-67ae288e7a0b">1. Large-cap stocks saw their biggest weekly inflow ever.</h2><div type="image" title="Chart showing inflow into large cap US stocks" height="897" width="1020" msid="115341350" hostid="261" sizebytes="42246"></div><h2 id="6640a71d-0059-4868-95bf-82898dfe90c2">2. Chinese stocks saw the biggest week of outflows in more than five months.</h2><div type="image" title="Chart showing outflow from Chinese stocks" height="867" width="986" msid="115341354" hostid="261" sizebytes="31244"></div><h2 id="f0e7fd4a-b458-4031-b623-1248301cb1ce">3. Financial stocks saw the biggest inflow in more than two years.</h2><div type="image" title="Chart showing inflows to financial funds" height="945" width="1082" msid="115341352" hostid="261" sizebytes="46122"></div><h2 id="f33bff20-8b01-4bad-b84d-207602c9141d">4. Gold saw its biggest outflow in more than two years.</h2><div type="image" title="Chart showing outflow from gold" height="858" width="999" msid="115341353" hostid="261" sizebytes="37944"></div><h2 id="b4a7a96b-aa46-4b21-89c6-c72d49676042">5. Money-market fund assets reached an all-time high.</h2><div type="image" title="Graph showing money market funds" height="835" width="980" msid="115341357" hostid="261" sizebytes="32386"></div><h2 id="f1e22c3a-573b-476b-a65a-3ee6136bf2ac">6. Crypto saw its biggest week of inflows on record.</h2><div type="image" title="Chart showing crypto fund flows" height="886" width="1012" msid="115341355" hostid="261" sizebytes="28802"></div>

6 charts showing Trump's immense post-election market impact 

<keyword id="19991358" type="General" weightage="100" keywordseo="Indian-markets" source="keywords">Indian markets</keyword> are navigating choppy waters as global economic shifts, from rate cuts to evolving political climates, create new pressure points across the financial landscape, according to a recent report by ANI attributed originally to the Union Bank of India.<br /><br />The domestic stock and bond markets showed signs of strain, with <keyword id="19910363" type="General" weightage="20" keywordseo="bond-yields" source="keywords">bond yields</keyword> witnessing slight adjustments. India’s 10-year government bond yield dipped to 6.82%, a decrease from the previous session, reflecting cautious investor sentiment as the markets react to shifting global indicators. Meanwhile, the 5-year bond yield remained steady at 6.76%, a signal of lingering hesitation amid economic unpredictability.<br /><br />In the currency market, the rupee faced a notable decline, ending the day at ₹84.3725 against the US dollar, slipping from its prior close of ₹84.2800. Market analysts point to significant capital outflows as a key factor, with investors moving funds to perceived safer assets overseas. This migration has weighed heavily on the rupee, underlining the currency’s vulnerability in an environment of global economic flux.<br /><br />India’s stock market bore the brunt of this volatility, with key indices falling over 1%, effectively erasing the gains of a previous rally. This abrupt drop reportedly reflects renewed investor anxiety, largely triggered by the recent <keyword id="20189882" type="General" weightage="20" keywordseo="US-presidential-election" source="keywords">US presidential election</keyword> results. Experts suggest that the election has introduced a fresh layer of uncertainty, not only for the US economy but for global markets, impacting everything from policy decisions to investor sentiment. Analysts are also keeping a close eye on upcoming decisions by central banks, which will likely shape the path forward for the Indian equities market.<br /><br />Commodities showed contrasting trends, with Brent crude prices falling on lower demand expectations, as economic indicators point toward cautious spending globally. Gold, on the other hand, experienced a modest rise as investors sought refuge in safe-haven assets, highlighting a shift towards risk aversion among market participants.<br /><br />Globally, major central banks made coordinated efforts to sustain economic growth, with the Bank of England (BoE) announcing a 25 basis-point cut, lowering its benchmark rate to 4.75%. The BoE’s Monetary Policy Committee (MPC) largely backed this move to counter inflation, which has been declining, albeit gradually. Across the Atlantic, the US Federal Reserve mirrored this action with its own 25 basis-point cut, a sign of confidence in the ongoing economic recovery. Both rate cuts, though modest, signal a global trend towards caution as economies work to balance growth with stability.<br /><br />In Asia, the People’s Bank of China (PBoC) maintained its supportive stance. Governor Pan Gongsheng sought to reassure foreign investors by reaffirming the PBoC’s commitment to growth-oriented policies. Pan emphasized enhanced communication and pledged to open China’s financial services sector further, aiming to attract more international participants.<br /><br />Europe, meanwhile, faced mixed economic signals. Germany reported a steep 2.5% drop in industrial production in September, signalling a slowdown in manufacturing, while the Eurozone saw a mild 0.5% rise in retail sales, reflecting cautious consumer optimism in the region.<br /><br />Adding another layer to the global economic landscape, the European Union’s Climate Change Service warned that 2024 could be the hottest year on record, underscoring urgent climate challenges just as the UN COP29 climate summit approaches. The summit, set to take place in Azerbaijan, aims to rally increased funding for climate action, though tempered expectations linger in light of recent US political shifts.<br /><br />On the domestic front, Niti Aayog CEO BVR Subrahmanyam spoke about India’s potential role in pivotal global trade agreements, specifically the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). These partnerships, Subrahmanyam suggested, could bolster India’s Micro, Small, and Medium Enterprises (MSME) sector, which currently accounts for 40% of India’s exports, offering a strategic advantage for Indian trade in an interconnected world.<br /><br />As the Indian markets digest these developments, experts believe continued volatility could be the theme for the coming months.<br /><br /><strong>(with ANI inputs)<br /></strong><br />

Indian markets under pressure as global rate cuts stir uncertainty, new report says

<ul class="summary-list"><li>European stocks are pricing in a Trump win, Barclays said.</li><li>Exporters have underperformed the broader European market by 15% since spring.</li></ul><p>With the US election less than two weeks away, European stocks have already been pricing in a Donald Trump victory, according to Barclays.</p><p>The firm noted that a basket of European exporters — or those companies most vulnerable to tariffs — has underperformed the benchmark European Stoxx 600 by 15% since early spring.</p><p>Barclays says this is reflective of investors preemptively bracing for Trump's tariff policy, which has been a cornerstone of his presidential-election platform, under the expectation he will win.</p><div type="image" title="Barclays chart showing how stocks exposed to tariffs have underperformed the broader index" height="1670" width="2136" msid="114514786" hostid="261" sizebytes="87238"></div><p>"Tariff concerns have been a drag on EU equities' relative performance year-to-date," Barclays analysts led by Emmanuel Cau wrote on Wednesday. "In the event of a full-blown trade war, we could see up to a high single-digit drag on EPS growth with Germany, Italy, Cap Goods, Autos, Beverages, Tech, Chemicals most at risk."</p><p>Barclays did note that some European firms have relocated production to the US since 2018, which could somewhat limit the impact of Trump's trade policy on the whole market. But it's still worried about the possible side effects.</p><p>"The second-order impact through lower growth and higher inflation (i.e. stagflation) could be more severe, in particular in the case of retaliation and a trade war," Barclays wrote.</p><p>The US will also feel the impact. The firm forecasts Trump tariffs will be a 3.2% drag on S&amp;P 500 earnings-per-share next year, with the most negative impact affecting materials, discretionary, industrials, technology, and healthcare. Beyond that, retaliatory measures would generate an additional 1.5% hit to forward EPS.</p><p>The note suggested a possible rebound for Europe's markets if Kamala Harris wins. Her policy would also boost clean and renewables in the region, which have also underperformed on the chances of a Trump win.</p>

One global market is already pricing in a Trump victory

<ul class="summary-list"><li>Luckin Coffee, which has put up a strong fight against Starbucks in Asia, is looking to the US.</li><li>The Chinese coffee brand, known for its heavy discounts, reported a strong third quarter.</li></ul><p>Luckin Coffee is <a target="_blank" class="" href="https://www.businessinsider.com/luckin-coffee-chinese-chain-making-starbucks-nervous-singapore-2023-11">putting up a strong fight against Starbucks</a> in Asia. Now, it's planning to bring that rivalry into the US.</p><p>Here's the state of play: Starbucks is trying to pull itself out of a rut. In its quarter ending September 29, Starbucks reported a 7% decline in sales worldwide. In China, the company's sales slid by 14% compared to the same period last year, to $783.7 million.</p><p>In August, it appointed Brian Niccol as its new CEO. Niccol has said <a target="_blank" class="" href="https://www.businessinsider.com/starbucks-ceo-to-lay-out-strategy-to-fix-coffee-chain-2024-10">his plan</a> to turn around the coffee chain involves faster orders, adding a human touch to the ordering process, and positioning the brand's outlets as "third spaces."</p><p>Luckin reported a strong third quarter. Its sales rose 41.4% year over year, and its quarterly revenue was $1.452 billion. The chain is known for its aggressive deals, unusual flavors like a Big Cheese coffee drink, and mobile ordering.</p><p>Both brands are well established in Singapore, with multiple outlets in the city-state's Central Business District. On a recent weekday around lunchtime, I stopped by both a Luckin and a Starbucks to see how they compare in price, menu options, and vibe.</p><h2 id="efd5eecf-2a86-4a4e-b481-4b74f8bf8a7d">Luckin versus Starbucks</h2><p id="efd5eecf-2a86-4a4e-b481-4b74f8bf8a7d">I started at Luckin Coffee.</p><p id="efd5eecf-2a86-4a4e-b481-4b74f8bf8a7d">When I walked in, I found people waiting around the collection counter for their drinks. Others were sitting around at tables drinking coffee.</p><p id="efd5eecf-2a86-4a4e-b481-4b74f8bf8a7d">But most customers seemed to be in a rush, ready to grab their drinks and go.</p><p id="efd5eecf-2a86-4a4e-b481-4b74f8bf8a7d">To order any menu item at Luckin, customers have to download the brand's app and place their order digitally. Staff members at the counter don't take orders.</p><p id="efd5eecf-2a86-4a4e-b481-4b74f8bf8a7d">The app was easy to use, though it hit me with numerous pop-ups for discount vouchers. Because I was a new user, every drink on the menu<strong> </strong>was half off for me.</p><div type="image" title="A Luckin Coffee outlet in Singapore's Central Business District." height="3024" width="4032" msid="115040697" hostid="261" sizebytes="788852"></div><p>The most expensive drink on the menu was an Iced Oat Shakerato listed for 8 Singapore dollars, or $6.<strong> </strong>With the discount, it cost me SG$4.</p><p>There were at least five orders waiting for collection before me. Still, my drink was ready in under five minutes, ready to be collected as soon as I scanned the QR code on my app. I didn't have to speak to a single person throughout the process.</p><div type="image" title="Luckin's ordering process was entirely digital, requiring no communication with the staff." height="768" width="1024" msid="115040695" hostid="261" sizebytes="75736"></div><p>After that, I walked about 100 feet to the nearest Starbucks, which had a large seating area. Some people in business clothes were taking lunch meetings there, while others hung around working on laptops.</p><div type="image" title="The interior of a Starbucks outlet in Singapore's business district." height="2835" width="3780" msid="115040693" hostid="261" sizebytes="737442"></div><p>The barista was friendly when I asked about the most expensive drink on their menu. It turned out to be one of their seasonal holiday drinks.</p><p>I chose the Salted Pretzel Cocoa Oatmilk Latte, which came out to SG$10.20.</p><p>Unlike Luckin, there was no one in line. I was out with my coffee, a venti-sized drink topped with crushed pretzels, in under three minutes, slightly faster than at Luckin.</p><p>Overall, Starbucks' most expensive drink was more expensive than Luckin's. Luckin had more customers, so the wait time was slightly longer than in Starbucks.</p><h2 id="e3e55b2a-ebe2-4754-a009-07c30921fd35">The battle for coffee domination</h2><p>Luckin Coffee was founded in Beijing in October 2017. It filed for bankruptcy in the US in 2021 after the fallout of an <a target="_blank" class="" href="https://www.businessinsider.com/luckin-coffee-fabricated-310-million-in-sales-investigation-2020-4">accounting fraud scandal</a>, in which it was revealed that it had faked nearly half of its roughly $732 million sales from 2019.</p><p>Today, it has 21,343 stores globally.</p><p>Luckin launched its first international stores in Singapore in March 2023, and the city-state now has more than 40 outlets. Now, it's eyeing the US market for expansion opportunities.</p><p>"We are also actively evaluating opportunities in the United States and other markets," Luckin wrote in its Q3 earnings report.</p><p>Representatives for Luckin Coffee didn't respond to a request for comment from BI for this story.</p><p>Starbucks has 40,199 outlets globally — nearly twice as many as Luckin does. Of that count, 7,596 stores are in China, an increase from the 6,806 it had a year ago.</p><p>When asked for comment, a Starbucks representative in China directed BI to the remarks made by Niccol and the brand's finance chief, Rachel Ruggeri, in its Q4 earnings call.</p><p>In the call, Ruggeri said sales in China were "weighed down by intensified competition and a soft macro environment that impacted consumer spending."</p><p>Luckin isn't Starbucks' only rising competition in the US. It's also contending with the likes of Dutch Bros. and 7 Brew.</p><p>"There are concerns about speed of service and operational complexity, and new menu innovation has been lacking," R.J. Hottovy, the head of analytical research at Placer.ai, told BI about Starbucks.</p><p>"Starbucks' decline in visits also comes at a time when other coffee and beverage chains are seeing year-over-year visit increases, reinforcing that new product innovations aren't connecting with consumers," he added.</p><h2 id="998c3bea-c071-471c-a5fb-74f3f2be2403">Analysts say Starbucks should be worried about Luckin Coffee</h2><p>Luckin's pricing and focus on technology gives it an edge over Starbucks, consumer analysts say.</p><p>David Yu, a finance professor from NYU, told BI Luckin is "all about technology." By comparison, he said Starbucks' use of technology, such as ordering on its app, is "pretty weak."</p><p>Yaling Jiang, a China consumer research expert behind the newsletter "Following the Yuan," published an article on Monday about Starbucks' performance in China. In it, Jiang said Starbucks has continually failed to "meet Chinese consumers' changing perception about product price."</p><p>Nirgunan Tiruchelvam, a consumer and equity analyst at Aletheia Capital in Singapore, told BI that he thinks Luckin "has an edge over Starbucks at the moment" because of its novelty.</p><p>However, he said Luckin may still be in an uphill battle in the US.</p><p>"Luckin Coffee's plans in the US may not go as smoothly as one would expect because the US is a very complex market, where Starbucks is much better entrenched than in Asia," said Tiruchelvam.</p><p>He said it's also cheaper to set up outlets in Asian markets than in the US.</p><p>"The expansion costs, in terms of the cost of rolling out an outlet versus the payback from it, are actually far more challenging in the US than in Asia," Tiruchelvam added.</p><p>Yu echoed those sentiments, saying aggressive discounting is not a sustainable approach for Luckin.</p><p>"I always say discounting is never a great long-term strategy. It could be used effectively for short-term purposes," he said.</p><p>However, Starbucks' increasingly expensive price tag has created an "opening" for Luckin, Yu said.</p><p>"So I think that's good timing for Luckin's perspective if they're willing to go and discount and price aggressively under to gain customers," Yu added.</p>

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What can you expect from the US Fed meeting later this week? Here's all you need to know

Ira Alok Puranik

India's refurbished smartphone market witnesses accelerated growth

Sourabh Jain

Rupee hits record low of 84.23 against US dollar amidst US elections 2024

BI India Bureau

FDIs may shift to US under Trump 2.0 but it is unlikely to severely impact FDIs inflow to India, says SBI Report

Ira Alok Puranik

6 charts showing Trump's immense post-election market impact

Jennifer Sor

Indian markets under pressure as global rate cuts stir uncertainty, new report says

BI India Bureau

One global market is already pricing in a Trump victory

Filip De Mott

Starbucks and Luckin are in a fight for the global coffee market. I visited both to see how they stack up on price, menu, and vibe.

Aditi Bharade

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