The emergence of a more educated and affluent Chinese generation provides significant investment opportunities, says global asset manager AB.
A statement from AB suggested that China’s Millennials – those born between 1980 and 2000 – are more educated, well-travelled and affluent than previous generations, but that in order to capitalise, investors will need to adopt a “calibrated” approach.
“[The rise of this group] represents an important and potentially exciting investment opportunity but, to understand it, investors will have to monitor the evolution of these young consumers’ spending patterns very carefully,” AB portfolio manager of strategic core equities Sammy Suzuki said.
“They’re young, they’re rich, they’re smart and they’re different, and they’re just as likely to set consumer trends as be influenced by them,” he said.
Mr Suzuki noted that group is already seen to be influencing global consumption and investment prospects in related industries.
“They love to travel and typically make four trips outside their country each year … They’re fuelling growth in domestic and regional airlines, airports and online travel agencies.
“Other markets likely to benefit as Millennials travel further afield include Thailand, Japan, Singapore and Dubai,” Mr Suzuki said.
However, Mr Suzuki added investors should "take note of how the cultural and social influences that are shaping millennial spending habits are changing fast".
“Capturing the investment opportunities that they’re creating is going to take a much more thoughtful and forward-looking approach to investing in emerging markets than simply buying an index,” he said.
Mr Suzuki argued that the nature of investing in emerging markets has changed – China’s growth is slowing and investing in the relevant equity index is no longer lucrative – reinforcing the importance of capturing new investment opportunities such as those provided by Millennials.
Economists agree that the Reserve Bank is likely to remain in inflation fighting mode until December. ...