Investing For Dummies

Investing For Dummies – Megatrends (part 2 of 3)

The story continues about megatrends. Today I will present next three megatrends. If you haven’t read the first post about series, please check it here: Megatrends (part 1 of 3)

Like I said in my first post, one of my methods find suitable companies or trends is to go thru megatrends and how I can benefit from those. So, let’s try to figure out what you as an investor or as a worker can do and benefit from the situation.

Megatrend #4: International trade

International trade will be one the main things why the middle class will increase a lot in Asia. It is expected that Asia’s share of global export will double to almost 40% by the year 2030. Companies need to find more locations where to manufacture more and cheaper goods. The means a lot of new investments to so-called “cheap” Asia countries.

freedomsearcher megatrends

Conclusion:

  • More Cargo
  • Purchasing power increases in Asia countries
  • Increasing GDP in “cheap” Asia countries
  • International trade will provide good investing opportunities
    • Cargo/shipping handling companies
    • ETF’s which are investing in this so-called Asia cheap countries (a single company might be too hard to pick)
    • Middle-class increases in Asia and they can buy more gadgets

Megatrend #5; Public Debt

Public debt in developing countries has doubled in past ten years, and it is expected to grow almost same rate. Increasing debt means, countries need to get debt under control, and they need to find new ways providing public services, or they need to decrease the number of delivered services.

Increasing debt in developing countries will increase risk and volatility of global markets. Aging population will put high pressure on system and countries will have an only limited potential to meet growing demand for services.

freedomsearcher megatrends

Conclusion:

  • People in BRIC / Asia countries are likely to buy more expensive houses, cars, and gadgets because they have more money in use
  • New emerging markets will appear; Nigeria, Indonesia, Myanmar, etc.
  • Investing opportunities:
    • Companies or ETF’s which provides loans to consumers
    • Companies providing services which are today provided by government

Megatrend #6; Economic Power Shift

By the year 2030, China and India will have 35% of world population and 25% of global GDP. In whole developing countries is estimated to have 57% of global GDP by the year 2030.

Economic power shift means emerging market economies will become essential players in international finance.

freedomsearcher megatrends

Source: Roland Berger; Trend Compendium 2030

Conclusion:

  • Western companies start to acquire companies from the BRIC countries
  • People in BRIC / Asia countries are likely to buy more expensive houses, cars, and gadgets because they have more money in use
  • Economic power shift will provide good investing opportunities
    • ETF’s investing in emerging markets
    • Companies selling middle-class items (fancy phones, electronics, etc.)

Next posts will be megatrends #7 to #9. So, stay tuned.

Regards,

Matt

 

Sources:

KPMG; Future State 2030