CFA Conference: Clint R. Laurent

CFATomorrow’s World: What Today’s Global Demographic Trends Mean for Asia and the Global Economy Moderated by Richard Brandweiner, CFA, First State Super Clint R. Laurent is CEO and founder of Global Demographics Ltd and director at Global Demographics Healthcare Ltd. He is an analyst of and commentator on global population and socioeconomic trends and their impact on the world economy. Dr. Laurent is an experienced adviser to multinational businesses and a frequent speaker at conferences. He is also the author of Tomorrow’s World: A Look at the Demographic and Socioeconomic Structure of the World in 2032. Previously, Dr. Laurent founded Asian Demographics, which transformed into Global Demographics as the firm’s geographical coverage increased. He has also worked at Hong Kong University and as a director at PricewaterhouseCoopers. Dr. Laurent holds a master’s degree in business from Victoria University of Wellington and a PhD in marketing and statistics from Bath University.

Key issues follow.

  • The changing age profile of populations means that traditional market segments (such as young, emerging, middle class) are no longer the growth markets
  • New country/age/income segments will be the opportunities of the next decade
  • Ways the new China will develop—with slower growth but higher consumer spending

My session notes follow. As always, these are contemporaneous notes. I make no guaranty as to their accuracy or completeness.

How the world will change (the creep of demographic change) over the next ten years…

Changing consumption patterns (what people want)

  • North America, Western Europe and Affluent Asia account for 65% of all the world’s consumer spending
  • The young tend to buy things; olders tend to buy experiences with an increasing propensity to save
  • Working age expanding upward (in Japan, e.g., age 70-74 is still working full-time; UK average retirement age is 67)
  • North America – growth across all age groups; unique among geographic areas
  • I Western Europe, only working age empty nesters make a growing category
  • In Affluent Asia, working age empty nesters and retirees are growing
  • China, South America. Eastern Europe and India
  • Huge growth of retirees in these areas; little growth of youth in India and South America (but not much money) and many fewer youth in Eastern Europe and (especially) China
  • Working age empty nesters growing in South America and India
  • In China, urban segment of working age empty nesters is both dominant and fast growing (+42% in the next decade)
  • In China, workers retire about age 64 (but only live to 67-68)
  • Worldwide, working age empty nesters are dominant

Changing work patterns

  • Working age population growing worldwide but for Eastern Europe, Affluent Asia and China
  • Key – female employment growing slightly worldwide
  • North America and Western Europe increasing numbers of workers
  • Big worker growth in India (will need 6mm extra jobs per year); significant growth in Developing Asia, Middle East, South Asia and South America
  • Eastern Europe will lose workers and China will lose lots of workers (wages will have to go up there)
  • India is behind educationally (70 dialects) – impacts the quality of the potential workforce; China isn’t doing great – needs to expand secondary education
  • The reality of growth rates – best opportunities in India and all of Asia is educational levels improve
  • Growth in China has been largely debt-financed – legs?

Changing opportunities

  • Ignore GDP and focus on private consumption expenditures
  • China is the fastest growing consumer market in the world
  • “Booming middle class” discussion in Asia deceptive because it usually involves US $10k in income – no money to be made until incomes reach US $20k
  • The growing affluent segment (US $100k) valuable worldwide; growing middle class has opportunity too
  • China underspends on housing (6% – North America 25%); they save 32% – opportunity
  • Growth deltas worldwide moving older and richer
  • In 20 years, China will have huge numbers of men without potential mates

Q&A…

  • Laurent expects 4.1% annualized growth in China – implications include strength for consumer goods, ages 40-60
  • San Francisco Fed says PE tends to fall as populations age, but people are working longer; older people may buy fewer things, but quality of purchases goes up
  • Need for financial services increasing where social safety net is weak
  • Sub-Saharan Africa – tough to get data; high birth rates, but death rates going up too
  • Canada – outlook and profile similar to US
  • Russia – similar age characteristics to Eastern Europe as a whole; former Communist counties have good education systems but weak health service and aging populations

One thought on “CFA Conference: Clint R. Laurent

  1. Pingback: CFA Conference: Post Compendium | Above the Market

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