Shanghai, China
Increasing affluence and the expansion of an affluent middle class in China will drive demand for high-end products and services over the next few decades. This fact, widely known to investors for some time, has been unaffected in the least by the current reduction in consumption, which is purely attributable to the country's anti-Covid measures.
Additionally, the People's Bank of China estimates that the most careful Chinese employees will have saved almost 2.6 trillion dollars by 2022. Even with the local population's historic proclivity to save, this is a significant amount.
"Today, using the Covid savings might raise consumption by 14-20%. A prosperous 2023 is thus expected for the companies that will be able to intercept this trend," underline Stella Li and Elizabeth Kwik, Investments Directors of the Scottish management house abrdn, highlighting how this year my driving force behind financial investments in the country is represented by the "ambitions " of improving the Chinese people's lives.
For example, national and international travel appears to be on the rise, as are the stocks of firms involved in the industry. Similarly, it is normal for the recovery of travel and the repopulation of socializing places to enhance demand for drinks, foodstuffs, and snacks, as well as their makers and distributors.
With the objective of transforming China into a moderately wealthy country by 2035, the government is progressively implementing programs to promote self-sufficiency and domestic consumption.
The country is aggressively investing in technology and innovation, particularly in green technology, telecommunications, and robots. All of this will result in better jobs and higher household income. This should boost spending even more.
Upper-middle-income Chinese households (those earning more than $22,000) will expand by 70% by 2023, according to McKinsey.