3. Insurance: Wide disparity in insurance coverage across Asia
Another area that is tied to both age and income is insurance. Developed markets have seen their growth years in this sector, but Asia’s share of total global premiums is set to grow strongly, both in terms of life and non-life insurance.
According to a report by insurer, Swiss Re, ageing populations will boost demand for life insurance products in emerging markets, while non-life insurance will profit from increasing urbanisation, an expanding middle class and rising economic wealth.
While there is currently a wide disparity in insurance coverage across Asia, we expect to see greater penetration in
most regions, particularly less developed countries.
4. Environment: Asia has a problem that it has only just begun to tackle
Any frequent traveller to Asia will understand the problem of pollution, which is particularly acute in major Chinese cities, such as Beijing. The Chinese government is starting to act on this and this is highlighted by the recent, unexpected deal with the US to tackle climate change.
The agreement includes new targets for carbon dioxide emissions, with China for the first time announcing its emissions will peak in 2030 and the US stating that it would emit
up to 28% less carbon dioxide in 2025 than in 2005. China has pledged that it will ensure clean energy sources, such as solar power, will account for 20% of the country’s total energy production by the 2030 deadline.
With such a deal struck between the world’s top two carbon polluters, it is likely to be only a matter of time before the same issue takes centre stage in the rest of Asia, much of which is suffering similar pollution issues. This will provide many good investment opportunities for global providers of pollution control equipment and clean energy sources.
‘Old Asia’ to ‘New Asia’: Don’t look backwards
Asia is evolving rapidly, which has implications for investors globally. It should no longer be viewed as just a cheap manufacturing hub but a region with high value-added industries catering to an increasingly wealthy middle class.
Investors have for some time looked at Asia as a straight growth story, but that isn’t the case anymore. In our view, it is the quality of growth that matters – as ‘Old Asia’ evolves into ‘New Asia’, investors need to consider where growth will come from in the future. Taking into consideration demographics, wage growth and a burgeoning middle class, Healthcare, Tourism, Insurance and the Environment are the areas that we believe will drive equity market re-ratings.