How To Profit From The Surging, Emerging Market Middle Class (KXI, CHIQ, INCO, BRAQ, CARZ, COH, TIF)
Rudy Martin: Most Americans know the story of the U.S. Baby Boom. Between 1946 and 1964, birthrates in the United States doubled due to economic and social change after World War II.
These 77 million “Baby Boomers” contributed to a historic boom in spending and consumption. Whether it was purchasing a home in the suburbs or a second car, this pursuit of a higher quality of life had a lasting effect on the U.S. economy.
Over the decades following the start of the Baby Boom, companies that successfully provided goods and services to this burgeoning demographic segment had an opportunity to grow revenues and expand their reach in the marketplace.
And I believe that now a similar trend may be occurring in the emerging markets — one that will introduce scores of opportunities for investors over the long term.
This Trend Is Different Than What We Experienced in the U.S.
It’s occurring on a much larger, global scale. The Brookings Institute estimates that by 2020 over half of the world’s middle-class consumption will come from emerging markets, with China and India representing 40% of that.
The emerging market’s middle class is about to ignite the biggest buying spree the world has ever seen. .
Like the Baby Boom, middle-class populations in many of these emerging economies are experiencing substantial growth, fueling competition among high-quality companies. Today, emerging markets already represent 30% of all luxury good sales globally, based on a Bain & Company study. We’re seeing signs of this in the international sales trends of companies like Tiffany (NYSE:TIF) and Coach (NYSE:COH).
And in China alone, middle-class households are projected to increase their spending from $100 billion in 2010 to $1.2 trillion by 2020, according to Oxford Economics.
While improving economic conditions have allowed hundreds of millions of people to pursue a higher quality of life, they have also positively influenced growth in telecommunications, transportation, and energy infrastructure. In doing so, the Greatest Consumer demographic trend in human history has unleashed a secondary wave of global infrastructure investment programs estimated in the trillions as well.
Here are five ETFs that invest in this Global Consumer idea:
- iShares S&P Global Consumer Staples Index Fund (NYSEARCA:KXI)
- Global X China Consumer ETF (NYSEARCA:CHIQ)
- EG Shares India Consumer ETF (NYSEARCA:INCO)
- Global X Brazil Consumer ETF (NYSEARCA:BRAQ)
- First Trust NASDAQ Global Auto Index Fund (NYSEARCA:CARZ)
Considering the economic impact that 77 million Baby Boomers had on the U.S. economy, the impact of 960 million middle-class consumers on emerging and global market companies will be dramatic. And this could set us up for the biggest stock market rally of all-time.
Enjoy your holiday,
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