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How to Profit From the Rising Global Middle ClassBy
Thursday, September 14, 2017
It's one of the biggest trends in the world today... the rise of the global middle class.
All over the world, populations are earning more money. This is increasing disposable incomes and consumer spending... and improving living conditions in these countries.
We've talked a lot about this trend in China. But it's also creating plenty of investment opportunities elsewhere...
The gap between developed markets and emerging markets is closing.
This growth means millions of people will be joining the middle class over the next 30 years... especially in India and China.
I've talked a lot about how China is seeing a massive middle-class boom... Back in 2000, just 4% of China's urban population was considered middle class. By 2022, that figure will be a whopping 76% – or 550 million people. That would make China's middle class big enough to be the third-most populous country in the world.
But India's not far behind... According to the World Economic Forum, India's middle class could grow larger than China's by 2027.
The Brookings Institute – a non-partisan think tank – suggests that by 2030, two-thirds of the global middle class will be living in Asia.
And all of these new middle-class consumers plan on spending more money – a lot more.
By 2030, China's average urban per-household disposable income is expected to double, according to consultancy McKinsey & Company. This will push Chinese consumer spending up 55% by 2020. That's an increase of $2.3 trillion – which is like adding a new consumer market 1.3 times larger than the U.K.'s current consumer market.
Meanwhile, India's average per-capita urban disposable income is expected to grow from around $1,000 in 2010 to around $3,700 in 2030. That might not sound like much if you live in the West. But it will drive Indian consumption to $4 trillion by 2025... making India the third-largest consumer market in absolute terms in the world – just behind the U.S. and China.
By 2030, Asia as a whole will account for nearly 60% of middle-class consumption. (To put that in perspective: In 2010, North America and Europe accounted for a little over 60% of middle-class consumption.)
What do people do when they suddenly get more money?
They spend more on leisure, health care, and looking good. But one of the biggest things they spend on is travel...
There's massive pent-up demand for travel in places like China and India.
It's similar to the pent-up demand that I remember seeing firsthand in Russia in the 1990s...
For decades, citizens of the former Soviet Union hadn't been allowed to travel, except in special circumstances.
After the end of the Soviet Union in 1991, travel restrictions were eased. But it wasn't until the economy stabilized years later, and people began to have more money, that international travel took off. Eventually, the then-emerging Russian middle class started to fly to European destinations on holiday – rather than to resorts in Russia and the former Soviet Union, which had been the extent of vacation options for their parents. Today, you'll hear Russian spoken in tourist spots all over the world.
And similarly, almost anywhere in the world – from Auckland, to Paris, to Buenos Aires – millions of new tourists from China and India are changing the global travel industry.
China is set to pass the U.S. to become the world's largest aviation market by passengers by 2024. And Chinese air passenger traffic will almost double to 927 million passengers a year by 2025 (compared to the U.S.'s 904 million by 2025). By 2035, the number will hit 1.3 billion.
Meanwhile, India is predicted to become the world's third-largest aviation market by 2025. Indian air passenger traffic is expected to increase to 500 million passengers per year over the next 10 to 15 years.
In other words, tourism in China and India is booming.
But it's only one of the industries set to profit from a rising global middle class.
As the world's middle class grows – along with their disposable incomes – consumers will buy things at a rate never seen before. And smart investors know that if they invest properly, this is the type of trend that can make them life-changing amounts of money.
Good investing,
Kim Iskyan
Further Reading:
"If you want to make big gains in the market, you need to invest in growth," Kim says. But China's middle class isn't the only growing market right now. Read more here: These Three Fast-Growing Markets Need to Be on Your Radar Today.
"These three sectors are creating massive opportunities for investors," Kim explains. Learn which kinds of businesses will benefit most during the Chinese consumer boom right here: These Three Industries Will Explode as the Chinese Middle Class Grows.
Market NotesANOTHER CHINESE TECH COMPANY TAKES OFF Yet another China-based technology stock is soaring high...
As regular DailyWealth readers know, Steve has been bullish on Chinese stocks for years. He expects billions of dollars to flow into Chinese companies, especially in the technology sector. And one of his favorite stocks is on a tear...
Baidu (BIDU) is China's version of Google. It owns the second-largest search engine in the world, handling more than 70% of web searches in China. But this tech firm is just getting started... The company is expanding into self-driving cars with its Apollo platform, which will provide software and "cloud" infrastructure to the vehicles. It hopes to achieve full autonomous driving by 2020.
As you can see in the chart below, Baidu's shares are up about 45% since January. Most of that rally followed a glowing second-quarter earnings release, where profit before interest and taxes rose by nearly 47% over the prior year, and total revenue grew by 14%. Steve's bet on Chinese tech companies continues to be a great call...
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