In recent weeks there has been strong sell-offs
across the markets. Some of the hardest hit regions are Asia, Emerging and
Frontier Markets. I am a strong believer in these regions for a number of
reasons, but that would take several blogs for me to expand on this.
I just want to expand on one aspect and this is the
new middle class. Middle class is defined as anyone earning between $10 and
$100 a day.
In 2009 there were 1.8 billion middle class people
on this planet; this is expected to grow to 4.9 billion by 2030. Asia will make
up 3.2 billion of this, with Europe sitting around 0.68 billion and North
America 0.32 billion.
We can see the impact of this, in China 2,500 vehicles
are sold every HOUR. Ghana has seen an 81% increase in car ownerships in 5
years.
India is expected to be the biggest middle class
population by 2030 (475 million), Africa and the Middle East 341 million and
Latin America 313 million.
There is actually good news behind the gradual
withdrawal of QE in the US but this has spooked the markets, with advising
clients this information is like gold dust. Why should you consider these regions
and should you be reducing exposure? The reality once the fog clears is that
these regions will be a major part of our lives within the next twenty years,
if they are not already and volatility doesn’t change that story.
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