• Bangladesh’s consumer market will be bigger than the UK in 2030, per our new proprietary demographics database
• Chinese insurance, Indonesian financial services, and Asian recreation are among the fastest growing sectors this decade
• HSBC identifies sectors where growth is fast but few companies are listed so they may turn to PE funds or IPOs; examples include Vietnamese autos and Indonesian insurance
Quantifying demographics. Want to know how fast Chinese beverages or Indian insurance will grow over the next decade? HSBC’s new proprietary demographics database quantifies demographic shifts and their impact on related sectors in considerable detail.
Indonesia and Bangladesh. It’s no surprise that Asia will become the dominant player in global consumer markets. But did you know that by 2030, Indonesia will overtake Brazil as the fourth-largest consumer market, after China, India, and the US? And that the fastest-growing market is Bangladesh, which will become the sixth largest consumer market globally, overtaking Germany and the UK by 2030?
A deep dive. HSBC’s proprietary database allows us to dive deeper and identify Indian and Chinese insurance, Indonesian financial services and autos, Indian telecoms, and Asian travel and recreation in general as some of the fastest-growing sectors over the next decade.
Potential for private equity (PE), angel investors, and IPOs. There is also a list of sectors where growth is fast but where few companies are listed. To fund growth, companies in these sectors might consider PE funds or conduct IPOs. Examples of these sectors are Vietnamese and Indonesian financial services (excluding banks), Indonesian insurance, and Vietnamese autos.
Stock selection criteria. We map this against HSBC’s stock coverage universe to identify stocks that are linked to sectors that benefit from certain demographic shifts.
Asia’s shoppers in 2030
• HSBC’s new proprietary demographics database shows that Bangladesh’s consumer market will be bigger than the UK in 2030
• In terms of the middle class, Indonesia will overtake Brazil in the next decade…
• …HSBC’s database also identifies Indian, Chinese, and Indonesian financial services, Indonesia autos, Indian telecoms, and Asian travel and recreation as the fastest-growing sectors through to 2030
The coming consumer market transformation
Over the next few decades, the world, and Asia in particular, will undergo significant demographic shifts. As for Asia, the region will become considerably older, wealthier, and households will continue to get smaller.
These changes result in significant shifts in spending patterns across Asia. But for equity investors, it is important to understand how this impacts companies. For that, we need to ask ourselves what will Asians purchase? Where are the new consumers? Will Indonesians spend more on, say furniture, than Indians or is it the other way around? And, as China ages, what will these consumers shop for?
HSBC’s economist, James Pomeroy, constructed a proprietary demographics database. Using this, we can now answer these questions in considerable detail. It allows us to link demographic shifts, such as ageing for example, to spending.
• In India’s case, the number of people that spend USD2-20/day is falling sharply (that is the group in black) and the number of people in the grey basket –spending USD21-50/day – is rising rapidly.
• In China, more people are moving into the upper income bracket, which are people spending over USD111/day. By 2050, these high-end spenders will account for more than 35% of the total population.
In short, it is not the “rising middle class” but it’s Asia’s “upper-middle class” that will be transforming consumer markets.
The rise of the upper-middle class is what’s driving consumer markets