Urs shares the current outlook for emerging markets, the key strengths of the team, and importantly how this benefits our investors. More
Taking a long- term investment view is key and current market lows could be a potentially interesting entry point.
Contributing an estimated 35.2% of global GDP between 2017 and 2019 according to the World Economic Forum, China is steadily surpassing the US as the biggest driver of global growth.
But macro numbers only tell one part of the story because, behind the statistics, China is seeing profound social changes and far-reaching transformations of its economy. This is being , driven by trends that have many years to run.
In 2012 the services sector took a dominant share of GDP and eclipsed manufacturing as the economy’s main driver. This confirmed that the process of economic rebalancing was well underway in China.
Greying population, golden opportunity
China's rapidly aging population will see an extra 110.7 million residents aged over 65 by 2030, according to United Nations’ forecasts. This is leading China to boost spending on public healthcare services and pass reforms to promote private investment in healthcare services and medical products.
Urban Chinese consumers taking the lead
Rapid urbanization (315 million new city residents between 2010 and 2015) has created a huge, urban consumer class, driving retail sales and online sales up making China the largest retail market in the world. And with real incomes rising and 240 million more urban citizens expected by 20301,China's consumer story still has further to run.
Leaping up the value chain
Confronted with more demanding customers, declining workforces, and rising wages, China's manufacturers are responding by creating higher-spec products, like state-of-the-art drone technology, electric cars and smartphones. They are also automating workforces by rapidly installing robotics. Three factories for example are now ranked in the World Economic Forum's top nine most innovative factories2. China's industrial base is rapidly changing.
Three trends driving long-term investment decisions
Aging population, the rise of the Chinese consumer, and China's innovating industrial base are three major long-term fundamental trends driving the transformation of the Chinese economy and pushing the emergence of new sectors like health care and education.
Allocating to these trends has driven strong performance in the past and, with much more room for these trends to grow, it is hard to expect that it would be different in the future. Global investors should therefore see the forest for the trees and ride through the current wobbles of the trade war rhetoric.
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