Age matters
It is said that aging doesn’t matter, unless you are cheese or, one could add, an investor.
For equity investors, population aging means labour force contraction, higher inflation, lower savings, higher interest rates, higher debt and lower economic growth, which in turn imply lower profit growth, and fewer and less attractive investment opportunities.
Emerging markets, thanks to growing and relatively younger populations and labour forces, should increasingly work as a hedge for aging populations in the West (and China), and stand to benefit as demographics play a bigger role in investment decisions.
This demographic dividend should be gradually reflected in valuations of EM assets, in line with what already happens to some extent within OECD countries (see this paper by Blackrock Investment Institute ).
Among emerging markets, Indonesia should be one of the main beneficiaries of demographics, both in terms of profit growth, and in terms of asset re-valuation.
First, because it has one of the largest, youngest and fastest-growing population in the world. And then because of the sizeable increase in productivity which we expect to come from the enormous investments of the last and also the next 20 years, partly the result of the Government’s Golden Indonesia 2045 Vision agenda and increasing FDI.
At Niche AM we find a theme before it becomes one (and as such crowded and expensive). We believe that Indonesia ticks all the right boxes to become a mega theme for investors over the coming years, of which very favourable demographics is just one. See here for details on our NJ Indonesian fund.
This is a marketing communication intended exclusively for institutional investors. Refer to the Fund Prospectus& KID before making any investment decision.
For any questions email us on: info@nicheam.com
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